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Roche increases offer price to approximately $6.7 billion
SAN DIEGO—As the acquisition process heads into its third month, Roche has finally consented to raise its offer price for Illumina, Inc. in hopes that a bigger price tag will seal the deal. Roche announced today that is has raised its offer for all outstanding shares of Illumina's common stock to $51 per share, for a total price of about $6.7 billion.
The new offer represents a 15 percent premium over the original offer of $44.50 per share, and, according to Roche, an "88 percent [premium] over Illumina's closing stock price on Dec. 21, 2011, the day before market rumors about a potential transaction between Roche and Illumina drove Illumina's stock price significantly higher."
"Based on our discussions with Illumina shareholders we have seen interest to accelerate the takeover process," Severin Schwan, CEO of Roche, said in a press release. "As a result, we are increasing our offer price to $51.00 per share. Roche's preference continues to be a negotiated transaction. We look forward to the possibility of a swift completion that offers immediate value to Illumina's shareholders."
The decision follows several staunch displays of refusal on Illumina's part, from enacting a "poison pill" defense to its refusal of the original offer. The most likely cause of the increase is the realization that Illumina's shareholders, like its board of directors, were largely unimpressed with the original offer and unmoved by the extensions. At the original expiration of the offer on Feb. 24, approximately 102,165 shares had been tendered, and by the second expiration on March 23, that number had only increased to about 144,208.
Illumina has advised its shareholders yet again to take no action and to not tender their shares to the offer. The company announced that its board of directors will review the revised proposal and make a recommendation after their examination.
Roche noted that the company had had "a number of productive discussions with Illumina's shareholders," and that it was "cognizant of your statements that you regarded our offer price of $44.50 as insufficient." It is Roche's hope that the new price will turn the tide, and that Illumina will agree that "interests of your shareholders and the fiduciary responsibilities of you and your Board require that you agree to enter into discussions with us."
"If you continue to decline to negotiate with us, we will have no choice but to continue our effort to effect a transaction unilaterally," Schwan continued in the letter. "However, I strongly hope that you will either agree to commence discussions with us now or remove all obstacles so that your shareholders can make their own determinations about the adequacy of our increased offer."
Goldman, Sachs & Co. and Bank of America Merrill Lynch are serving as Illumina's financial advisors throughout this process, and Dewey & LeBoeuf LLP is serving as its legal counsel. For its part, Roche has brought on Greenhill & Co., LLC and Citigroup Global Markets, Inc. as its financial advisors and Davis Polk & Wardwell LLP as its legal counsel.