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San Diego NewsRoche Plans Hostile Takeover of San Diego-based IlluminaBy Associated Press • Wed, Jan 25th, 2012 Roche is planning a $5.7 billion hostile offer for U.S. gene-sequencing company Illumina, as the Swiss drug company bids to get into a business expected to grow as genetic medicine becomes more sophisticated. Illumina makes systems that analyze an individual's DNA. It's expected that future breakthroughs will use that information to tailor treatments in ways that are especially effective for people with certain genes. Roche Holding AG said late Tuesday that the deal would accelerate routine clinical use of DNA testing. And it said that buying San Diego-based Illumina Inc. will strengthen Roche's position in diagnostics because the companies' technologies are complementary. Early Wednesday, Illumina's board urged shareholders not to take action until it reviews the offer and makes a recommendation. The offer sent Illumina's shares up 35 percent to $50.99 in premarket trading. Roche's planned tender offer of $44.50 per share would represent an 18 percent premium over Tuesday's closing price of $37.69 for Illumina shares. Roche said the offer price also is 64 percent higher than the last closing price before speculation surfaced in December that Roche was considering acquiring Illumina. Roche, which has more than 80,000 employees and specializes in cancer drugs and diabetes management, said it has tried to negotiate a deal, but Illumina has declined to participate. The deal will depend on a majority of Illumina shareholders tendering their stock. Roche said it plans to nominate a slate of independent candidates for a majority of the seats on Illumina's board of directors and to propose measures for shareholders to consider at their 2012 annual meeting. Roche CEO Severin Schwan said Roche remains open to talking with Illumina and developing a joint strategy for the combined businesses. If the Illumina buyout proceeds, Roche plans to move the headquarters for its applied science business to San Diego but maintain operations for the unit in Penzberg, Germany, where it's now based. Roche has a history of success with hostile offers. It eventually acquired U.S. cancer drug maker Genentech in 2009 by forcing buyout talks with such an approach. Roche Chairman Franz Humer said in a letter to Illumina President and CEO Jay Flatley included in Roche's statement that Roche hopes to retain Illumina's managers and employees. Illumina's board confirmed last week that it wasn't interested in negotiating a deal, according to Humer's letter. It plans to announce its fourth-quarter results and hold a conference call with investors on Tuesday.
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