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Roche Offers to Buy Illumina for About $5.7 Billion
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Swiss drugmaker Roche said it is offering about $5.7 billion cash to buy U.S. gene sequencing device maker Illumina to boost its position in the life sciences and diagnostics business, in a potentially hostile takeover bid.
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Sean Russell | Getty Images |
Roche, the world's largest maker of cancer drugs, said it would offer to acquire all shares of Illumina [ILMN
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The Swiss drugmaker said it would commence a tender offer as Illumina was not willing to negotiate a transaction.
"Roche has made multiple efforts to engage with Illumina in order to reach a negotiated transaction, but Illumina has been unwilling to participate in substantive discussions," the company said in a statement.
The Swiss company also said it will nominate a slate of independent candidates for election to Illumina's board.
Roche said the deal will be financed from available cash and borrowings under its credit facilities and will not require a financing condition.
"It is our strong preference to enter into a negotiated transaction with Illumina," Severin Schwan, Chief Executive of Roche Group, said in a statement.
Illumina was not immediately available for comment outside regular U.S. business hours.
Shares Weak
Capital Research Global Investors, Baillie Gifford & Co, Sands Capital Management, Morgan Stanley Investment Management and Jennison Associates are the five biggest shareholders of Illumina, who, according to Reuters data based on filings, own about 44 percent of its outstanding shares.
Roche is chasing Illumina because biotechnology and pharmaceutical companies can utilize gene-sequencing on a larger scale to predict a patient's response to a particular drug, especially during drug trials.
Companies such as Illumina, Affymetrix [AFFX
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] get 20-40 percent of their revenue from U.S. government-backed research and may take a hit from any government funding cut.
Shares of Illumina, which receives a significant portion of its revenue from research institutes that depend on government funding, have halved over the past six months after the company warned that it expects the uncertainty in research funding to continue through at least the fourth quarter.
Illumina is scheduled to report its fourth-quarter results on Jan. 31.
Roche said it has hired Greenhill & Co and Citigroup as financial advisers.
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