Wednesday 25 January 2012

Roche to buy Illumina?

Looks like Roche want a chunk of Illumina. There are press releases on both companies websites (Illumina and Roche) about Roches offer. There is little on the Illumina release except confirmation about the unsolicited acquisition proposal at $44.50 per share, this amounts of $5.7Bn according to Roche and is a 64% premium on current stock price.

Roche speak about the combination of the two companies and a strengthening of diagnostics potential. They also state that the will merge headquarters to the San Diego Illumina site (who incidentally just built nice new offices).

The press release quotes Roche's CEO Severin Schwan as saying "It is our strong preference to enter into a negotiated transaction with Illumina, and we remain willing to engage in a constructive dialogue" whether Illumina are so eager is another thing entirely.

Dear Jay... the press release finishes with a letter from Franz Humer (Roche Chairman) to Jay Flatley (Illumina CEO). It says a lot about the unwillingness of Illumina to engage and how great the merger will be for both companies.

I had also heard that Qiagen were hovering over Illumina. Illumina have been incredibly successful over the past five or six years, I am not surprised someone is wiling to pay a lot of money to buy them. Is $44.50 good enough? I am not sure, especially given the price was nearly $80 last Summer.


  1. The price of a stock at any time is what someone is willing to pay for it. It is not necessarily reflective of the value of the company. Hence what Illumina sold for last summer has no bearing on what it is worth in a all-out transaction. Just ask CSCO shareholders who bought in Dec-2000 on the basis that in the very same summer the stock was worth 2x that. You can safely argue that given what was known at the time $80 was clearly unsupportable. Without diagnostic applications of genomics ILMN is not worth half of what Roche is offering to pay for it, so the big risk for Roche is whether clinical applications will ever materialize.

  2. The overall prognosis for lung cancer is poor when compared with some other cancers. Survival rates for lung cancer are generally lower than those for most cancers, with an overall five-year survival rate for lung cancer of about 16% compared to 65% for colon cancer, 89% for breast cancer, and over 99% for prostate cancer.


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