Reuters: Deals: Roche steps up overtures in Illumina bid battle

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Roche steps up overtures in Illumina bid battle Apr 4th 2012, 07:20 The logo of Swiss pharmaceutical Roche is seen ahead of a news conference on a media release, in Basel February 1, 2012. Credit: Reuters/Ruben Sprich By Martin de Sa'Pinto ZURICH | Wed Apr 4, 2012 3:20am EDT ZURICH (Reuters) - Roche Holding AG (ROG.VX) stepped up its charm offensive towards Illumina (ILMN.O) shareholders as it battles to take over the U.S. gene sequencing company, telling them its increased $6.7 billion bid represented concrete value in a high-risk market. The Swiss pharmaceuticals company again appealed directly in a letter to Illumina shareholders for them accept its $51-per-share bid after the U.S. company's board rejected the offer ahead of its April 18 shareholder meeting. "Roche's increased offer represents a significant premium to where Illumina would likely trade on a standalone basis and provides certainty of value through an all-cash payment to Illumina's shareholders," Roche said in the letter. "Your decision will ultimately determine your ability to obtain certain value for your investment amid increasing headwinds for Illumina and the broader sequencing sector." Roche has also presented a slate of directors who will seek election to the Illumina board at the April 18 meeting in an effort to force Illumina to negotiate a deal. However, some analysts expect Roche to have to sweeten its offer once again. "After an attempt to control the board on April 18, we would anticipate a higher offer to follow, but expect the process to be slow and drawn out," said Mizhuo healthcare analyst Peter Lawson. Illumina, which has so far not spoken directly with Roche, has countered that the bid grossly undervalues the company, pointing to its leading market position. It recently said its latest quarterly revenues were well above expectations. Illumina wasn't immediately available for comment on Wednesday. The two firms have been at odds to win over shareholders since Roche's initial $44.50 per share bid, valued at $5.7 billion once options triggered at that price were factored in. Illumina shares closed at $52 on Tuesday, indicating that some investors believe Roche could sweeten its improved bid still further. A source familiar with the situation last week told Reuters that Roche could further increase its bid if it found more value in the business during the due diligence process. However, Roche said it has identified other options in the sector if its Illumina bid fails, and several analysts have said Illumina shares could sink below pre-bid levels if that happens. Illumina shares had traded at between $35 and $38 in the week preceding the Roche bid, when the Swiss company maintains rumors of a bid had already surfaced, buoying the share price. A source close to the situation said top Illumina shareholder Capital Research, which owns 11.4 percent of the company according to Thomson Reuters data, had pressed the board to engage with the Swiss drugmaker after Roche's improved bid. However, hedge fund investors who asked not to be named said Illumina's strong rejection of the second offer showed UK-based investment firm Baillie Gifford, Illumina's second largest investor, had succeeded in marshalling opposition to the deal. (Reporting by Martin de Sa'Pinto; Editing by Erica Billingham and Mark Potter) Link this Share this Digg this Email Reprints

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