ROCHE Holding is offering $5.7bn (£3.6bn) in cash to buy US gene sequencing company Illumina in an unfriendly takeover bid that marks a major move by the Swiss drugmaker into the gene technology field.
Gene sequencing is central to personalised medicine, which allows scientists to predict a patient’s response to a particular drug, both during clinical practice and in drug trials.
The current offer price is 18 per cent above Illumina’s closing price on Tuesday and over 60 per cent above the level before rumours of a bid started, but analysts have said Roche might have to raise its offer to secure a deal.
Roche chief executive Severin Schwan said the company had no intention of raising its offer.
Basel-based Roche said it would offer to buy Illumina’s shares for $44.50 each in cash. Roche currently owns a very small number of Illumina shares, finance chief Alan Hippe said. It plans to commence a tender offer because Illumina was not willing to negotiate a transaction.
“Roche has made multiple efforts to engage with Illumina in order to reach a negotiated transaction, but Illumina has been unwilling to participate in substantive discussions,” it said.
A deal would be financed from available cash and borrowings under its credit facilities and would not require new finance, Roche said.
Illumina urged shareholders to take no action pending a recommendation from the board.
MEET THE ADVISERS
ROCHE has turned to regular financial advisers Greenhill and Citigroup on its bid for Illumina, having mandated both houses on previous M&A transactions.
Citi’s team on the deal includes its global head of health care investment banking – ex-Lehman Brothers employee Chris Hite – and Wilhelm Schulz, the bank’s head of European M&A.
Born in Austria, Schulz completed his MBA in the UK at Lancaster University, and worked as a ski instructor before climbing through the Citi ranks.
Both Schulz and Hite worked on Roche’s $230m acquisition of hepatitis C specialist Anadys Pharmaceuticals in October last year.
Greenhill’s healthcare team has previously worked for Roche as the sole financial adviser on its 2009 acquisition of biotechnology company Genentech for $46.9bn after a lengthy pursuit.
Illumina is being advised on the offer by Bank of America Merrill Lynch, and Goldman Sachs.
By Elizabeth Fournier
City A.M. Reporter