Thursday, 26 January 2012

"If you can't beat them, join them!" (or... buy them): Roche's hostile bid for Illumina.

"If you can't beat them, join them!" is a proverb often used in politics and war. In this case we use it for a financial strategy chosen by the "commanders" of Roche. Some rumors started to appear in the past weeks, but now Roche comes out with an official bid of (please take a sit) $5.7 billions to acquire Illumina, more precisesly $44.50 per share in cash, an 18 percent premium over Illumina's closing share price of $37.69 yesterday.
Apparenlty Roche started to negotiate silently with Illumina to find a way to reach a deal, but Illumina decided to refuse any kind of offer. Franz Humer, Roche’s chairman, decided, after numerous efforts, to release a public letter to Illumina chief executive and chairman Jay Flatley bemoaning “the lack of any substantive progress in our efforts to negotiate a business combination between Illumina and Roche” and a January 18 letter confirmed a lack of interest by Illumina’s board.
By acquiring Illumina, Roche will strengthen its position in the DNA sequencing and microarrays market "to address the growing demand for genetic/genomic solutions." More importantly, however, is the hope that Illumina's technology will "help accelerate the transition of DNA sequencing into clinical routine diagnostics" the firm said.
At the moment the "commanders" of Illumina refuse to accept all the offers made by Roche, but, as a smart conqueror, Roche's CEO Severin Schwan try to seduce the lower military ranks: "we therefore believe that the shareholders of Illumina will consider positively the opportunity to sell their shares at a price above the current market values."

No comments: