Roche Holding AG, the Swiss drugmaker that made a $5.7 billion hostile offer for the gene- mapping company Illumina Inc. (ILMN), said it has other options if the deal falls through.
“Illumina is not the only gene-sequencing company, and there are other companies making quantum leaps in this field,” Franz Humer, Roche’s chairman, said in the text of a speech to be delivered at the company’s annual meeting in Basel today. “Roche and Illumina both stand to benefit from a rapid merger. However, this is a sector where we have other options should the transaction fail over price.”
The Swiss drugmaker on Feb. 27 extended its takeover offer for Illumina as investors speculate a price increase will be necessary to win control of the U.S. company. Shareholders have until March 23 to tender their stock at $44.50 a share.
Illumina has rejected the offer as “grossly inadequate,” saying on Feb. 27 that it doesn’t “reflect Illumina’s unique leadership position, business performance and future prospects.” Jay Flatley, Illumina’s Chief Executive Officer, today told CNBC that Roche’s offer “dramatically undervalues” the company and that the company currently isn’t in negotiation.
Roche’s preference is to “enter into a negotiated transaction with Illumina and to commence discussions to that end,” Humer said in the speech. Roche is disappointed that Illumina’s board won’t enter into talks, he said.
Roche, the world’s biggest maker of cancer drugs, reiterated its 2012 forecast, saying it expects a percentage increase in earnings per share excluding some items in the high single digits excluding currency shifts.
Sales are expected to grow in the low to mid single-digit range at constant exchange rates, Chief Executive Officer Severin Schwan said in the text of his speech.
Roche has cut costs as two new skin cancer drugs --Zelboraf for metastatic melanoma and Erivedge for advanced basal cell carcinoma -- are poised to add to sales. Roche repeated it would continue its “attractive dividend policy” even as it pursues the Illumina acquisition.