In response to the recent extension of
) acquisition bid for
), the latter urged its shareholders to decline the offer as it
considers this offer to be grossly inadequate.
In its second request letter, Illumina precisely explained its
current prominent position in the genomics and DNA sequencing
technology industry with superior operational performance and
financial success, which the company believes is worth more than
the Roche offer. Currently, Illumina's shares are trading at
Details of the Request Letter
Illumina drew attention to its leading position in the global
next-generation sequencing market where it has a 60% share. Also,
the company estimates that over 90% of all sequencing output across
the world is produced on Illumina instruments.
In addition to that, the company also noted its steady
performance over the past decade during which it had consistently
outperformed analyst estimates of revenues and EPS. While revenues
increased at a 10-year CAGR of 83%, non-GAAP EPS increased at a
5-year CAGR of 26%. Moreover, Illumina generated a 1,129% return to
its stockholders compared to a mere 16% gain in the S&P 500
during the 10-year period.
Roche had announced its bid to acquire all shares of Illumina
for $44.50 per share (aggregate value $5.7 billion) in cash in
January. Before this, Roche had made multiple efforts in the past
to strike a deal with Illumina, but Illumina was never eager to
participate in substantive discussions.
This led Roche to commence a tender offer to purchase
Illumina's outstanding shares. If the deal goes through, Illumina
is expected to add life to Roche existing Applied Science
Earlier this month, Roche extended the time period of its
hostile bid for the second time. The company has extended the
tender offer to April 20, 2012, from the previously-extended date
of March 23, 2012. However, the company reiterated all other terms
This extension of the tender offer expiry date was on the heels
of Roche receiving a 'second request' from the Federal Trade
). The FTC is seeking additional information regarding the proposed
Presently, Illumina and Roche both retain a short-term Zacks
#3 Rank (Hold) which also corresponds to our Neutral
recommendation over the long term.
ILLUMINA INC (
): Free Stock Analysis Report
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