Roche is increasing its offer to purchase Illumina from $44.50 to $51 per share. This represents a deal valued at almost $6.6 billion, cash. Amazing!
Though no deal has yet been struck, because this is a cash deal that has been made public by Roche, the FTC is already investigating the acquisition for violations of antitrust laws.
Illumina has advised their stockholders to defer taking any action in response to Roche’s increased offer. (Illumina press release)
“Based on our discussions with Illumina shareholders we have seen interest to accelerate the takeover process,” says Severin Schwan, CEO of Roche. “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.” (Roche’s press release)
Below is the text of the letter Roche sent on March 29, 2012 to Jay Flatley, President and Chief Executive Officer of Illumina, Inc:
Over the past several weeks, we have had a number of productive discussions with Illumina’s shareholders and we have observed the market reaction to our offer to acquire Illumina. We are also cognizant of your statements that you regarded our offer price of $44.50 as insufficient to provide a basis for discussions between our companies.
In light of this, we are increasing our offer for all outstanding shares of Illumina to $51.00 per share. Our revised offer represents a 15% premium to our offer on January 25, 2012 and a substantial premium of 88% over Illumina’s closing stock price on December 21, 2011, the day before market rumors about a potential transaction between Roche and Illumina drove Illumina’s stock price significantly higher. It also represents a 34.1x multiple of Illumina’s projected forward earnings based upon analysts’ current consensus estimates for 2012.
As you know from our prior communications, it has been and remains Roche’s preference to conclude a negotiated transaction with Illumina. We hope that you will agree that our new price presents a very attractive opportunity to your shareholders and that the 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. 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.
I look forward to hearing from you.
Franz B. Humer
Chairman, Roche Holding Ltd