The board of directors of San Diego-based Illumina today rejected a takeover bid launched by Roche, based in Basel, Switzerland. The move by Illumina, which estimates that its machines produce 90% of the world’s genetic-sequencing output, was not surprising, given the company’s earlier moves to deter the offer.
Illumina’s board “unanimously determined that the $44.50 per share cash offer is grossly inadequate in multiple respects, dramatically undervalues Illumina and is contrary to the best interests of Illumina’s stockholders,” the company said in a press release.
Illumina said that the timing of Roche’s bid was opportunistic, coming weeks after Illumina announced weak third-quarter earnings and said that it would lay off 8% of its workforce, sending its stock price for a dive. The company’s stock had traded as high as US$79.40 in July 2011.
Illumina’s fourth-quarter 2011 earnings, announced today, were 6.3% higher than its earnings in the last quarter of 2010, although when one-time charges were accounted for, the company’s earnings fell 70%.
Illumina said that it was best positioned to capture growth in the sequencing industry in areas such as “molecular diagnostics, reproductive health, cancer management and industrial-end markets such as agricultural biotechnology, veterinary medicine and forensics.” It also said that the company has “a robust line of new products and services, which the Board believes will create powerful new tools in the armaments of researchers and healthcare providers.”
Illumina’s press release says that two new platforms, the HiSeq 2500 and MiSeq, will diversify the company’s customer base beyond genome research centres, but does not mention what platforms may eventually replace these, which employ Illumina’s current technology. Illumina faces serious competition in the race to deliver the $1000 genome from Life Technologies of Carlsbad, California, and its Ion Torrent platform.
Illumina has a commercialization agreement with the UK-based company Oxford Nanopore Technologies, which is developing a new genetic-sequencing platform. However, Oxford Nanopore said earlier this month that it will commercialize its own DNA sequencing system this year, and that this system will employ a separate analysis technique from the one licensed to Illumina. Oxford will present the first data readout using its technology on 17 February at the Advances in Genome Biology and Technology conference in Marco Island, Florida.
Other documents released by Illumina today give more details of the Roche offer and of a lawsuit filed on 30 January against the Illumina board by shareholders who favour the offer.
Roche did not immediately respond to the rejection of its offer. Roche succeeded in previous hostile takeover bids for the companies Ventana Medical Systems and Genentech by considerably raising its offer price.
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