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Roche makes offer of $5.7bn for genetics film Illumina

Company aims to strengthen position in diagnostics market through use of gene technology

Roche has made a hostile offer worth $5.7bn to purchase US-based genetics firm Illumina.

In a statement, Roche said that the acquisition of Illumina would strengthen its position in the diagnostics market, with Illumina's gene technology complementary to its own.

Gene analysis is seeing progress in medical research, especially in cancer where Roche is a world leader, with the company keen to accelerate the transition of DNA sequencing into clinical and routine diagnostics.

If the deal, worth $44.50 per share, were to be agreed, Roche would combine its existing Applied Science business with Illumina and move the business area's headquarters to San Diego, California, US.

Roche would also maintain operations in Penzberg, Germany, the current headquarters of Roche Applied Science.

“Our ability to offer a total solution to researchers will help enable the discovery of complex new biomarkers improving drug discovery and the selection of patients most likely to respond to a targeted treatment with high clinical relevance,” explained Daniel O'Day, chief operating officer of Roche's diagnostics division.

“In addition, by building on Illumina's capabilities Roche will be able to use its scale, global distribution and diagnostic test development expertise to develop new diagnostic tests that serve patients and customers even more effectively.”

The hostile offer follows a series of attempts from Roche to negotiate a transaction with Illumina, although Roche said the gene specialists had been “unwilling to participate in substantive discussion”.

Roche's CEO, Severin Schwan, said: “It is our strong preference to enter into a negotiated transaction with Illumina, and we remain willing to engage in a constructive dialogue with Illumina to jointly develop an optimal strategy for maximising the value of our combined business.”

However, Schwan claimed the hostile offer represented “full and fair value for Illumina” and expected Illumina's shareholders to be willing to sell.

Responding to news of Roche's offer, a statement from Illumina said: “Illumina's board of directors will thoroughly review Roche's proposal and make a recommendation to stockholders in due course that the board believes is in the best interests of Illumina stockholders.

“Illumina stockholders are advised to take no action at this time pending the board's recommendation.”

25th January 2012

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