Roche pressures Illumina with higher, $6.7B offer
For Illumina, playing hard to get is starting to pay off.
Swiss drug giant Roche ($RHHBY) has upped its offer for the San Diego-based gene sequencing company ($ILMN) to nearly $6.7 billion, or $51 a share, up 15% from its initial hostile bid on Jan. 25 of $5.7 billion, or $44.50 per share.
Vontobel analyst Andrew Weiss told Reuters that Roche's higher offer is "fair" and suggested it could "be enough to get Illumina management to the table." One reason why: The higher price acknowledges demands from some Illumina shareholders for a better offer, according to Bloomberg's coverage of the story. Investors will have until April 20 to tender their offer at the higher share price, the story notes. In another pressure point Roche brings into play, Illumina's shareholders will vote on whether to replace board members with individuals nominated by Roche when they meet on April 18 for the company's annual meeting.
Illumina has so far declined to negotiate and long-ago rejected Roche's initial offer as "insufficient." The California company also quickly adopted a "poison pill" shareholder rights strategy to make Roche's bid even harder. Still, Roche prefers a negotiated deal, according to a March 29 letter Roche disclosed from its CEO Franz Humer to to Illumina CEO Jay Flatley. If Roche wins, it will gain the ability to use gene sequencing to enable personalized treatments for its drugs.
"It has been and remains Roche's preference to conclude a negotiated transaction with Illumina," Humer writes. But he also offers a not-surprising ultimatum:
"If you continue to decline to negotiate with us," Humer warns, "we will have no choice but to continue our effort to effect a transaction unilaterally." He asks Flatley to either start talking, or "remove all obstacles" so Illumina's shareholders "can make their own determinations about the adequacy of our increased offer."