Roche seen extending its Illumina offer once again

ZURICH Thu Mar 22, 2012 11:36am EDT

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ZURICH (Reuters) - Roche Holding AG (ROG.VX) is likely to extend its $5.7 billion cash bid for U.S. gene decoder Illumina (ILMN.O) again when its offer expires at midnight on Friday, as the Swiss drugmaker stays true to an M&A strategy that has so far been successful.

Roche is bidding $44.50 per share, and on Tuesday urged Illumina shareholders to take up what it believes is a "full and fair" offer. Roche has so far not been able to talk to Illumina management, which has dismissed the offer as too low.

"I think Roche will extend its offer and will keep on doing this until there is some reaction from Illumina and it can sit down and talk with Illumina's management," Helvea analyst Karl-Heinz Koch said.

The San Diego-based company makes machines that decode a person's entire genome and would give Roche a leading position in the market for gene sequencing, which can help better identify which patients benefit from a given drug.

Roche, the world's largest maker of cancer drugs, has already extended its offer for Illumina as it digs in and plays a waiting game before possibly stepping in with a higher offer, a strategy that has paid off in the past.

Roche took seven months to buy U.S. diagnostic test-maker Ventana for $3.4 billion in 2008, when Chief Executive Severin Schwan was head of its diagnostics unit. It first made an unsolicited, low-end bid before increasing its original offer by 19 percent.

Roche is hoping to gain a majority on Illumina's board at its annual general meeting on April 18.

"The shareholder meeting is now being held earlier than expected, robbing Roche of the chance to raise the offer before the AGM," Sarasin analyst David Kaegi said.

"Some thought Roche might try to win over more shareholders before the meeting with an improved offer, but this is now very unlikely. Now that the possibility of a swift conclusion has been removed, this is likely to drag on as expected," Kaegi said.

(Reporting by Katie Reid. Editing by Jane Merriman)

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