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Roche withdraws bid for DNA sequencing pioneer Illumina

30 April 2012
Appeared in BioNews 654

The standoff between Roche and Illumina, which provides services and equipment for genetic analysis, finally came to an end last week as the Swiss pharmaceuticals giant ended efforts for a hostile takeover bid.

Roche began proceedings earlier this year (reported in BioNews 642) to acquire all outstanding shares of Illumina, later increasing its offer from $5.7 billion to $6.8 billion.

The announcement came after Illumina's shareholders voted to re-elect all of Illumina's directors to the board at the company's annual meeting. It follows attempts by Roche to install board members favourable to the takeover, in order to force Illumina to the negotiating table.

'We have throughout this process desired to engage in a constructive dialogue with Illumina's management, listen to its views of value and prospects, and offer a fair and adequate price to Illumina's shareholders', said Severin Schwan, CEO of Roche. 'But in the absence of such discussions, our duty to be disciplined with the assets of Roche's shareholders has led to this decision'.

Illumina, on the other hand, felt that the takeover proposals were priced too low.

'We are pleased that Roche has decided not to extend its inadequate offer to acquire Illumina and that we can now return our full focus to growing our business', Jay Flatley, CEO of Illumina, said.

Roche's refusal to push its hostile takeover bid may reflect the uncertainty of its investors that Illumina will win the race to introduce the fastest,cheapest gene sequencing technology.

It faces stiff competition from Nanopore, based in Oxford in the UK, who announced the development of a powerful sequencing platform set for commercial release later this year, and global biotechnology giant Life Technologies.

Illumina has countered such conjecture, stating that it expects high demand for its new products which will be faster and more accurate than other offerings on the market.

'A lot of people in the sequencing industry really don't know which technology is going to win in the end', Jack Scannell from investment management firm Sanford C. Bernstein told Bloomberg. 'That spooked a lot of Roche shareholders. There is a huge amount of caution that you end up buying Betamax and not VHS'.

The future remains uncertain. 'I don't think Roche has completely given up', Bryan Brokmeier from investment bankers Maxim Group told Bloomberg. 'They may come back with an offer if Illumina shares don't move or if Illumina comes out with better news on its pipeline'.
Illumina Announces Preliminary Voting Results for 2012 Annual Meeting of Stockholders
Illumina (press release) |  18 April 2012
Illumina Fends Off Roche’s Hostile Bid
DealBook (New York Times) |  18 April 2012
Roche calls off Illumina takeover effort
Nature News Blog |  18 April 2012
Roche decides not to extend its tender offer for Illumina, Inc.
Roche (press release) |  18 April 2012
Roche Drops Illumina Bid on Concerns of Flawed Technology
Bloomberg |  19 April 2012
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