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Roche extends offer for Illumina

Deadline moved to March, although deal remains same value

Roche has extended the deadline in its hostile takeover bid for genetic sequencing specialist Illumina by another month to give shareholders more time to accept the tender offer, but has not improved the deal.

The Swiss multinational is still offering $44.50 per share for Illumina - valuing the company at around $5.7bn - but has already seen its offer roundly rejected by Illumina's management board, which described it as "grossly inadequate" and "opportunistic".

The tender was previously due to expire on February 24 but has been extended to 6pm EST on March 23.

Roche said that by the first deadline, around 102,000 shares in Illumina had been tendered and not withdrawn pursuant to the offer, out of a total of more than 122m outstanding shares.

Illumina has take steps to obstruct Roche's advances, including a plan granting existing stockholders the right to buy shares at a discounted rate, and "golden parachutes" guaranteeing generous payments for executives if they lose their jobs within two years of a takeover.

Analysts have suggested that Roche is playing a waiting game and will eventually raise its offer, as this is a strategy that has served it well in the past in bids for Ventana Medical Systems and Genentech.

For its part the Swiss company is maintaining that its offer is a premium of 64 per cent over Illumina's share price ahead of the bid announcement, and a 43 per cent premium over the three-month historical average for the stock.

The document filed by Roche to support the extension also notes that Illumina is facing a more competitive environment in the gene sequencing arena following recent product launches from Oxford Nanopore Technologies and Life Technologies Corp.

Illumina has said that around 90 per cent of the world's sequencing output is currently carried out on its instruments.

When making its bid, Roche argued that the acquisition would strengthen its position in the diagnostics market and allow it to offer a "total solution" to researchers working on biomarkers for use in drug discovery and the selection of patents for targeted therapy.

28th February 2012

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