SAN DIEGO—As the acquisitionprocess heads into its third month, Roche has finally consented to raise itsoffer price for Illumina, Inc. in hopes that a bigger price tag will seal thedeal. Roche announced today that is has raised its offer for all outstandingshares of Illumina's common stock to $51 per share, for a total price of about$6.7 billion.
The new offer represents a 15percent premium over the original offer of $44.50 per share, and, according toRoche, an "88 percent [premium] over Illumina's closing stock price on Dec. 21,2011, the day before market rumors about a potential transaction between Rocheand Illumina drove Illumina's stock price significantly higher."
"Based on our discussionswith Illumina shareholders we have seen interest to accelerate the takeoverprocess," 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 preferencecontinues to be a negotiated transaction. We look forward to the possibility ofa swift completion that offers immediate value to Illumina's shareholders."
The decision follows severalstaunch 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 theincrease is the realization that Illumina's shareholders, like its board ofdirectors, were largely unimpressed with the original offer and unmoved by theextensions. At the original expiration of the offer on Feb. 24, approximately102,165 shares had been tendered, and by the second expiration on March 23,that number had only increased to about 144,208.
Illumina has advised itsshareholders yet again to take no action and to not tender their shares to theoffer. The company announced that its board of directors will review therevised proposal and make a recommendation after their examination.
Roche noted that the companyhad had "a number of productive discussions with Illumina's shareholders," andthat 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 thetide, and that Illumina will agree that "interests of your shareholders and thefiduciary responsibilities of you and your Board require that you agree toenter into discussions with us."
"If you continue to declineto negotiate with us, we will have no choice but to continue our effort toeffect a transaction unilaterally," Schwan continued in the letter. "However, Istrongly hope that you will either agree to commence discussions with us now orremove all obstacles so that your shareholders can make their owndeterminations about the adequacy of our increased offer."
Goldman, Sachs & Co. andBank of America Merrill Lynch are serving as Illumina's financial advisorsthroughout this process, and Dewey & LeBoeuf LLP is serving as its legalcounsel. For its part, Roche has brought on Greenhill & Co., LLC andCitigroup Global Markets, Inc. as its financial advisors and Davis Polk &Wardwell LLP as its legal counsel.