The US diagnostics company Illumina has rejected Roche’s $5.7bn hostile takeover bid, calling the offer “grossly inadequate” and urging stockholders not to tender their shares.
Roche, the Swiss pharmaceuticals company, last month launched an unsolicited bid for Illumina for $44.50 a share in cash, about a 64 per cent premium to the genetic sequencing company’s share price in mid-December.
Illumina then adopted a “poison pill” to protect its shareholders, allowing them to buy new common stock if a bidder acquired 15 per cent of the company’s shares. Roche countered last week by proposing a slate of new Illumina directors.
In a letter to Roche’s chairman on Tuesday, Illumina said: “After careful consideration, including a thorough review of the terms and conditions of Roche’s tender offer, our board of directors unanimously determined that Roche’s offer is grossly inadequate in multiple respects, dramatically undervalues Illumina and is not in the best interests of Illumina’s stockholders.”
Illumina said Roche had failed to accurately value its growth potential and pipeline. Moreover, it argued Roche was trying to capitalise on a dislocation in Illumina’s share price that will be corrected once the company’s research stabilises this year.
Roche said it was reviewing Illumina’s response and maintained that its offer was “full and fair”.
Shares in Illumina closed down 0.33 per cent to $51.80 on Tuesday. Roche shares were up 2.68 per cent to $44.