Can anyone imagine the response in China, France, Brazil, or Japan to a foreign company making a hostile take over bid for a national treasure? What would happen if Warren Buffet tried to buy Aerbus?
Roche’s Hostile Takeover Bid for Illumina, What Price America?
NEW YORK (GenomeWeb News) – Illumina today postponed the release of its fourth-quarter and full-year 2011 financial results as its board reviews Roche’s $5.7 million hostile bid for the San Diego-based next-generation sequencing and microarray firm.
Illumina competes with Life Technologies Corp., Affymetrix Inc. and other companies to sell gene-decoding machines that are just starting to be used to tailor therapies for patients with cancer and inherited diseases. While scientific excitement around genome sequencing is high, the companies’ shares have plu
mmeted over the last year because their target customers are mostly scientists dependent on grants in a tough economy.
Getting the technology out of the lab and into doctors’ offices and hospitals could vastly expand the existing $1.5 billion market for gene sequencing machines, industry officials and analysts said.
“This is going to be an enormous opportunity, and now you see it unfolding,” said Greg Lucier, chief executive officer of Life Technologies, based in Carlsbad, California, in a telephone interview. The bid Roche is an acknowledgment that DNA mapping is key to the future of diagnostics, particularly involving its use in cancer treatment, he said.
Illumina today adopted a so-called poison-pill takeover defense in which shareholders will receive one preferred stock purchase right as a dividend for each common share held as of the close of business on Feb. 6.
‘Unwilling to Participate’
Roche made its hostile offer directly to Illumina shareholders after saying the testing company was “unwilling to participate in substantive discussions,” according to a statement yesterday.
The rights agreement adopted today by Illumina can block a hostile bid by making it prohibitively expensive. Should Roche or another bidder own 15 percent or more of Illumina’s stock, other shareholders will be able to exercise the rights to buy new common stock, diluting the stake of the prospective bidder.
Before initial talk of a takeover attempt surfaced in December, the shares of Illumina — which draws a third of its revenue from researchers funded by the National Institutes of Health — had dropped 58 percent over 12 months. Life Technologies and Affymetrix also tumbled, leaving them as vulnerable as Illumina to buyout bids, said Bill Bonello, an analyst with RBC Capital Markets in Minneapolis.