Allowing the bid to expire at 6 p.m. New York time on April 20 would end the Swiss drugmaker’s three-month quest to buy Illumina, a bid now valued at about $6.7 billion. Illumina shares sank below the offer price for the first time last week and continued the decline as investors grew concerned Roche would abandon the deal if Illumina didn’t agree to start discussions. Roche on March 29 raised the bid to $51 a share from $44.50 a share.
“We think Roche’s reaction is to be expected,” said Quintin Lai, an analyst at Robert W. Baird & Co. in Milwaukee, in a note to investors. “Roche failed to sweeten adequately its offer to win control of the board or to convince Illumina to come to the negotiation table.”
Roche had moved to force Illumina into negotiations by starting a proxy fight to gain control of the San Diego-based company’s board. That attempt ended today when Illumina won the support of shareholders for its slate of directors, based on preliminary estimates at the company’s annual meeting in New York. Shareholders also rejected Roche’s attempt to expand Illumina’s board to 11 from nine members.
“We are pleased that Roche has decided not to extend its inadequate offer to acquire Illumina and that we can now return our full focus to growing our business,” Illumina Chief Executive Officer Jay Flatley said today in a statement.
Roche made its decision not to extend the offer based on the meeting results, the Basel, Switzerland-based company said today in a statement.
“We continue to hold Illumina and its management in very high regard but, with access only to public information about Illumina’s business and prospects, we do not believe that a price above Roche’s offer for Illumina of $51 per share would be in the interest of Roche’s shareholders,” Roche CEO Severin Schwan said in a statement. “In the absence of such discussions, our duty to be disciplined with the assets of Roche’s shareholders has led to this decision.”