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Roche "disappointed" by Illumina poison pill

by Andrew Bulkeley | Published January 27, 2012 at 8:56 AM

Roche Holding AG on Friday, Jan. 27, professed itself "disappointed," but not surprised, after Illumina Inc. adopted a poison pill to thwart the Swiss pharmaceutical company's $5.7 billion unwanted approach.

Illlumina Thursday said it would give investors who hold its shares Feb.

6 the right to buy one additional share for each six they hold as a dividend. The rights may only be exercised if someone acquires a 15% Illumina holding, increasing the cost of any approach.

The Basel-based medicine maker - the world's biggest producer of cancer treatments - kicked off its third major hostile approach this week after Illumina's board refused to discuss a deal. The Swiss company wants to add Illumina's gene-sequencing equipment to its own analysis activities and offer treatments targeted to the specific DNA of tumors.

"Roche's all-cash offer represents a substantial premium and Roche is confident that Illumina shareholders will see the value of the offer,"

the company said.

Analysts and investors see both the approach and resistance as less of a true hostile move and more as public posturing - and history backs up their assessment. Roche has twice used unwanted approaches to force adversaries to the bargaining table and hammer out a deal.

In 2008 it won over shareholders of Tucson, Ariz., tissue analysis company Ventana Medical Systems Inc. by sweetening an unwanted $3 billion bid to $3.4 billion.

That same year it convinced minority shareholders of San Francisco's Genentech Inc. to hand over the 44% stake it didn't already own by improving its offer to $46.8 billion from an initial $43.7 billion.

Roche is also proposing a change to Illumina's bylaws to allow it to propose a majority of its own executives to the target's board at the next shareholders meeting. No date has been set for the meeting but it can be no later than June.

Illumina shares pared 4.5%, or $2.50, Thursday to $52.65, well above the $44.50 per-share Roche plans to offer. Roche shares slipped less than 1%, or Sfr0.8, to Sfr159.40, in morning Zurich trade, valuing its entire equity at about Sfr139.4 billion ($151.8 billion).

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Tags: Genentech Inc. | M&A | poison pill | Roche

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Roche "disappointed" by Illumina poison pill

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Andrew Bulkeley

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