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Pharma Buyout Bid: Roche Offers $5.7 Billion for Illumina

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(Image: Stock.xchng)
(Image: Stock.xchng)

FINANCE

  • Roche puts forth another offer to buy Illumina at $44.30 per share
  • Offer 50 times greater than Illumina’s earnings between Sept. 2010 - Sept. 2011
  • Bid part of Roche’s plan to increase cancer drug sales

Swiss-owned pharmaceutical giant Roche has plans to take over San Diego-based Illumina Inc, which focuses on gene-sequencing. The announcement comes after Illumina rejected previous offers from Roche to negotiate a buyout.

Roche proposes to purchase all Illumina common stock at a price of $44.30 per share, which places Illumina’s value at $5.7 billion. According to Bloomberg, this is 32 times greater than the $1.39 per share predicted by analysts this year.

The offer is also 50 times greater than Illumina’s earnings between September 2010 and September 2011. Roche chief executive Severin Schwan told AFP the deal represents Illumina’s full and fair market value.

Illumina’s board of directors will review the proposal, and asked shareholders to take no action. It has a total of 2,100 employees.

This is not Roche’s first attempt at a hostile takeover of a US company. In 2008, Roche purchased Ventana Medical Systems for $3.4 billion, and in 2009 it purchased Genentech for $46.8 billion.

Roche Aims To Add Genetic Reading

Roche is one of the world’s largest pharmaceutical manufacturers and the largest cancer drug maker, and wants to own Illumina for its leadership in DNA sequencing systems.

If the takeover bid is successful, Roche would use Illumina’s technology to read the genetic makeup of tumors and potentially offer treatments tailored to individual patients. On Jan. 10, Illumina announced it would market a machine capable of reading gene sequences in one day, instead of the standard 10 days.

In addition, Roche would move its applied science headquarters to San Diego, while maintaining operations in Penzberg, Germany.

Schwan told reporters via conference call: "Combining the strengths of Roche and Illumina makes a lot of sense, both from a strategic and operational point of view."

Key Statistics – Global Clinical Diagnostics (source: Global Industry Analysts)

  • By 2017, Clinical Diagnostics Automation is predicted to be $10.5 billion.
  • The fastest growing segment of the global clinical diagnostics automation market is stand-alone automation, which is predicted to have a CAGR of nearly 17% between now and 2017.
  • The United States is the clinical diagnostics automation market leader. Europe is the second largest. The rest of the world market is expected to grow at a compounded annual rate of more than 12%, with growth to be driven primarily by Asia’s expanding population.

By Melina Druga for
Melina Druga is an American writer and editor. She is the author of Enterprising Women: Practical Advice for First Time Entrepreneurs.

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