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Illumina Shares Gain on Report of Higher Roche Bid

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Dec. 20 (Bloomberg) -- Illumina Inc. gained the most in almost a year after Swiss newspaper L’Agefi said Roche Holding AG may have agreed to buy the U.S. maker of DNA sequencing equipment at a price 48 percent higher than its original unsuccessful bid.

Illumina jumped 7.8 percent to $56.22 at the close in New York, the biggest single-day increase since Jan. 25. The San Diego-based company has gained 85 percent this year amid the takeover talk.

Roche and Illumina management may have agreed to a bid at $66 a share last week that might be announced in the first half of January, the newspaper said, citing information that “appears trustworthy though couldn’t be verified.” Alexander Klauser, a spokesman for Basel-based Roche, said the company doesn’t comment on “market rumors.” Laura Trotter, an Illumina spokeswoman, also declined to comment on the report.

Such a bid would be worth about $8.1 billion, compared with the $6.7 billion price rejected by Illumina last April. Martin Voegtli, an analyst at Kepler Capital Markets, said he thinks the reported bid is “highly unlikely.”

“Roche management would lose its face and trust with a renewed $66 bid,” he said, adding that nothing has happened in the past eight months to justify such a price increase.

“We’re always said that for Roche to go into that business, they would need to be a dominant player,” which would mean paying up for an Illumina or a rival like Life Technologies Corp., said Peter Lawson, a Mizuho Securities USA analyst in New York who has a “buy” rating on Illumina. He has a $57 price target for the stock.

It could make sense for Roche to try again to negotiate a deal, though at a price closer to its last offer, said Odile Rundquist, an analyst at Helvea in Geneva.

“I’m surprised about the $66 price tag,” she said. “I remain skeptical.”

To contact the reporter on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net; Alex Nussbaum in New York at anussbaum1@bloomberg.net

To contact the editor responsible for this story: Kristen Hallam at khallam@bloomberg.net; Reg Gale at rgale5@bloomberg.net

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