Roche-Illumina Saga Continues

RocheHoldings Ltd. (RHHBY) recently expressed its disappointment at the Institutional Shareholder Services’ (ISS) recommendation that Illumina Inc.’s (ILMN - Snapshot Report) shareholders should not elect Roche’s independent director nominees to Illumina’s Board of Directors.

However, Roche said that it is pleased that ISS noted that Roche would make an excellent partner for Illumina, as the sequencing industry becomes more intertwined with the development of new drugs.

We note that last week Roche had issued a second letter to Illumina’s shareholders, requesting them to tender their shares to Roche for a payment of $51.00 a share. Roche’s second letter came after Illumina rejected Roche’s offer to acquire all its shares.

Since January, Roche has been trying to acquire Illumina, when it had first announced its bid to acquire all shares of Illumina at an offer price of $44.50 per share (aggregate value $5.7 billion) in cash. Then, on February 27, Roche extended the time-period for its bid to March 23 from February 24, 2012. In March, Roche further extended the time period for acquiring all outstanding shares of Illumina to April 20, 2012, from the previously announced date (March 23, 2012).

Additionally, in the last week of March, Roche increased its offer price for Illumina shares to $51.00 (aggregate value $6.7 billion) from $44.50 a share, while the other terms and conditions of the deal remained unchanged.

Roche believes that this acquisition will strengthen its position in the sequencing and microarrays market. Moreover, it will help address the growing demand for genetic/genomic solutions.

We currently have a Zacks #4 Rank (short-term Sell rating) on Roche.