Update on Roche's Illumina Buy - Analyst Blog

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Roche Holdings Ltd. ( RHHBY ) recently announced that the Federal Trade Commission ( FTC ) has requested for additional information regarding the company's proposed acquisition of Illumina, Inc. ( ILMN ). The request, termed as a 'second request,' seeks additional information about Roche's microarray business.

The second request extends the waiting period, imposed by the Hart-Scott-Rodino Antitrust Improvements Act, by 10 days after Roche complies with the request. The extension can be increased voluntarily by Roche or terminated sooner by the FTC.

We note that Roche had first announced its bid earlier this year in January, to acquire all shares of Illumina at an offer price of $44.50 per share (aggregate value $5.7 billion) in cash.

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 currently have a Zacks #2 Rank (short-term Buy rating) on Roche. We believe that this transaction will add to the company's portfolio, thereby driving long-term growth.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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