By Michael Fitzhugh
In a recent statement, Roche called that $51 per share bid "full, fair and extremely attractive." But in a separate letter to Illumina shareholders, Roche CEO Severin Schwan also called the $6.8 billion bid "a more than reasonable starting point for negotiations." That room for negotiation will be critical maneuvering space if Roche is to convince Illumina shareholder to accept an offer that their company has characterized as "grossly inadequate."
Schwan says that Roche's offer represents "a significant premium to where Illumina would likely trade on a standalone basis" and urged Illumina shareholders to vote in a slate of directors Roche has nominated.
Illumina is one of the top players in genomics and DNA sequencing technology. The takeover attempt is seen as an effort by Roche to create a personalized medicine powerhouse, with both genomic sequencing and targeted therapeutics capabilities.
But despite gaining praise in a recent article that the company highlighted for shareholders, which called it "the Apple (AAPL) of the genomics business," Schwan says, "there is one glaring difference between Illumina and Apple - Illumina's MiSeq and HiSeq ARE NOT the iPhone and the iPad." He noted the company's expected 2012 revenue of between $1.1 billion and $1.9 billion represent modest year-over-year growth of between 4 and 11 percent, far less than Apple's dynamic growth.
The Swiss drugmaker, which initiated its pursuit of Illumina with a $5.7 billion bid in January, has already raised its bid to $6.8 billion. Illumina's board immediately adopted a "poison pill" strategy that would take effect should any one entity acquire 15 percent of the company's shares.
Roche's tender offer expires on March 26, but will likely be extended, especially if it is unsuccessful in getting its board nominees elected.
Roche has shown patience and perseverance in its last two big takeover attempts, which were ultimately completed. It fought to acquire Ventana Medical Systems for seven months before succeeding to acquire it at a 19 percent premium; and it took close to eight months before it sealed the deal to acquire the 44.1 percent of Genentech it did not already own for $46.8 billion. In that deal it had to raise its offer to $95 per share, $6 a share more than the original offer of $89 per share.