Illumina urges shareholders to reject buyout

AP News
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Posted: Apr 02, 2012 3:37 PM
Illumina urges shareholders to reject buyout

Illumina urged its shareholders Monday to reject a sweetened buyout offer from the Swiss drugmaker Roche, saying that the $6.5 billion deal still undervalues the California maker of genetic analysis instruments.

Roche raised its proposed price for Illumina last week, but Illumina CEO Jay Flatley says the offer is still not good enough. He calls the deal "opportunistic" and says his San Diego-based company is poised to deliver better returns through higher sales and profits.

Roche Holding AG did not immediately provide comment on Illumina's statement.

Illumina shares fell 88 cents, or 1.7 percent, to $51.73 after word of the latest rejection.

Swiss drug company Roche Holding AG proposed to buy Illumina in January for $44.50 per share, or about $5.7 billion. Roche said the deal would strengthen Roche's position in life sciences diagnostics because its technologies are complementary with Illumina's.

Illumina's board unanimously turned down Roche's offer, saying it was "grossly inadequate" and that shareholders should not tender their stock to Roche.

Last week, Roche raised its offer to $51 per share, or about $6.5 billion, an increase of almost 15 percent.

Earlier Monday, Illumina said that its first-quarter revenue will be about $270 million on strong demand for its research instruments. The estimate tops current Wall Street expectations.

The company also said that it expects its adjusted earnings for the quarter will match of beat current Wall Street expectations. Analysts expect earnings of 31 cents per share on revenue of $258 million, according to a survey by FactSet.

Illumina said the numbers could change by the time it reports its final earnings results later this month.

Illumina makes equipment that biotechnology researchers can use to sequence genes or do other tasks.

Flatley said that during the first quarter, the company's "book-to-bill" ratio showed that customer orders were outpacing deliveries for the third consecutive quarter. He said more customers are "getting back to work," and boosting demand.

Illumina's shares rose sharply after Roche made its initial offer for the company, and the stock is up about 65 percent for the year.