Roche's Illumina Bid Gets More Time - Analyst Blog

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Roche Holdings Ltd. ( RHHBY ) recently announced that it has extended the time period for acquiring all outstanding shares of Illumina, Inc. ( ILMN ) to March 23, 2012, from the previously-decided date (February 24, 2012). Roche had first announced its bid in January to acquire all shares of Illumina at an offer price of $44.50 per share (aggregate value $5.7 billion) in cash.

We note that Roche had made multiple efforts in the past to strike a deal with Illumina, but the latter was unwilling to participate in substantive discussions. This led Roche to commence a tender offer to purchase Illumina's outstanding shares.

Post the potential acquisition, Roche intends to combine Illumina with its Applied Science business, thereby strengthening its current offerings in the Life Science market. Roche operates through two segments - Pharmaceuticals and Diagnostics. Applied Science is a wing under the company's Diagnostics division.

Roche believes that this acquisition will strengthen its position in the sequencing and microarrays market. Moreover, it will help address the growing demand for genetic/genomic solutions.

We note that this is the second acquisition by Roche in the last six months. In the fourth quarter of 2011, the company acquired all the shares of Anadys Pharmaceuticals Inc. at $3.70 per share, at a total consideration price of $230 million.

The acquisition of Anadys augmented Roche's hepatitis C virus (HCV) portfolio, with Anadys' lead pipeline candidate - setrobuvir (ANA598). Setrobuvir, which is currently in mid-stage trials, is being studied in combination with Roche's pegylated interferon (Pegasys) and ribavirin (Copegus).

Anadys is also developing ANA773, an oral, small-molecule inducer of innate immunity, currently in early-stage trials, which might be used for treating HCV as well as other chronic infections and cancer.

We currently have a Zacks #3 Rank (short-term Hold rating) on Roche. We believe that these transactions will help add to the company's portfolio, thereby driving long-term growth.


 
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