Illumina agreed Monday, Jan. 7, to pay as much as $450 million for the rights to Redwood City, Calif.-based Verinata Health Inc. Specifically, Illumina will shell out $350 million up front and up to $100 million in milestone payments through 2015 to acquire the company.
But investors in Illumina weren't cheered by the news of the deal and may have been more dismayed about a published report that indicated that Roche is no longer planning on acquiring the company. Illumina's share price plunged more than 8%, to $50.01 per share from $54.76 per share, in midday trading Monday.
Even so, Illumina feels that the Verinata acquisition gives it a stranglehold on the market for prenatal testing. In acquiring Verinata, Illumina is adding a provider of noninvasive tests for the early identification of fetal chromosomal abnormalities.
In a statement Monday, Illumina called Verinata's prenatal test, named verifi, "the broadest noninvasive prenatal test (NIPT) available today for high-risk pregnancies" and the "most comprehensive intellectual property portfolio" in the NIPT industry.
Verinata is Illumina's second acquisition in less than four months. It acquired Cambridge, U.K.-based BlueGnome Ltd., a provider of cytogenetics and in vitro fertilization screening solutions, for an undisclosed sum in September.
"Building on the recent acquisition of BlueGnome and our expertise in next-generation sequencing, this announcement further establishes Illumina as a leader in reproductive health," Illumina president and CEO Jay Flatley said in a statement.
The NIPT market is estimated to be worth more than $600 million in 2013, Illumina noted.
The acquisition comes just as the long-running soap opera between Basel, Switzerland-based Roche and Illumina took its latest turn. Roche launched a $5.7 billion, $44.50 per share hostile bid for Illumina in January 2012, but met significant resistance from Illumina management, which felt that Roche was trying to buy the company on the cheap.
Roche did later raise its offer to $6.3 billion, or $51 per share, and mounted a campaign to win Illumina board seats. But Roche ultimately backed down in March when Illumina shareholders re-elected four Illumina board members at the company's annual meeting.
Speculation persisted nonetheless that Roche would redouble its efforts at some point and make a new play for Illumina until Roche chairman Franz Humer squelched it somewhat when, on Monday, he was quoted in a Swiss newspaper as saying that "Illumina is definitively off the table" and that Illumina "wasn't ready to retreat from [its] totally excessive price demands."
Illumina is the world's leading provider of the most advanced genetic testing services. The company posted $86.63 million in net income on $1.06 billion in revenue in 2011, according to regulatory filings.
Jack Bodner led a team at Covington & Burling LLP that provided Illumina with legal counsel.
Adam Chazen, Ivan Farman and Alex Desjardins of Bank of America Merrill Lynch were Illumina's financial advisers, while Philip Richter led a Fried Frank Harris Shriver & Jacobson LLP team that represented BofA.
Jenner & Block LLP hired middle market private equity lawyer Jason Osborn from Kirkland & Ellis LLP in Chicago. For other updates launch today's Movers & shakers slideshow.
Corporate reincorporations overseas may suddenly be a hot topic in Washington, but tax scholars see them as part of a much broader problem, says The Deal's David Marcus in a feature story. Deals that allow U.S. companies to migrate overseas - called inversions - are a response to the U.S. tax system's attempt to tax earnings made by U.S. corporations all over the world. Other countries have moved away from such a system, most notably Japan and the U.K. That's made the U.K. a more attractive venue for companies and helped allow Japanese corporations to grow by making acquisitions overseas. But the dysfunctional U.S. political system means such change is unlikely here. More video