Wednesday, 1 February 2012

Roche attempting to acquire Illumina

Roche a Swiss based drug maker has attempted to acquire Illumina, a US based company which is excelling in Gene mapping technology. Roche has given a tender offer to the shareholders directly bypassing the management in a hostile attempt. It would have been a friendly acquisition if the management of Illumina had shown some response to the Swiss drug maker. It is a huge move as Illumina is in the phases of developing a machine which could equip the company to generate information of individual human beings gene and so that the drug making companies could utilize that information to create 'customized' cancer medicines which could result in more productivity.

The tender offer is of $5.7bn with $44.50 offer per share. This offer has reflected a positive signal to the investors and the share price for Illumina has risen while the share price of Roche has fallen as the investors have thought it would be a lengthy bid battle and would end in Roche paying more.

The management of Illumina has decided to take a take over defence through Poison pills. They may offer their existing shareholders the right to purchase additional shares at discount from the market making it costly and ultimately difficult for Roche to perform the deal.

This deal would be an advancement for Roche in the field of personalized medicine and the motive is clear to have unique capability being owned. The growth of Illumina is remarkable and it will add value to Roche. An interesting story is developing as I was going through Mergers & Acquisitions and the terminologies like tender offer, poison pills etc. have just been read and understood by me. I will be tracking this story to see how it ends. 

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