February 15, 2012 / 1:30 AM / 8 years ago

Shareholders sue Illumina over Roche bid

* Class action over poison pill

* Alleges Goldman gave bad advice

* Alleges Goldman had conflicting financial interest

By Leigh Jones

Feb 14 (Reuters) - A group of Illumina shareholders has filed a putative class action against the life sciences company alleging that its directors adopted a poison pill plan to thwart a takeover by Swiss drugmaker Roche Holding Ltd., based on bad advice from Goldman Sachs.

The lawsuit, brought on behalf of all Illumina stockholders, was filed Tuesday in Delaware Chancery Court. It alleges that Goldman Sachs had a conflicting financial interest in advising Illumina to reject Roche’s offer to buy the company and in advising the company to adopt a poison pill plan. The lawsuit asserts that Illumina had “inexplicably chosen to receive” Goldman’s advice even though it was conflicted.

In a hostile takeover bid last month, Roche offered to buy Illumina for about $5.7 billion, which Illumina rejected. Illumina then adopted a poison pill plan defense strategy, which enabled shareholders to exercise rights to buy new common stock if Roche or any other bidder acquired 15 percent or more of Illumina’s stock.

Tuesday’s lawsuit alleges that Goldman Sachs had an incentive to advise Illumina to reject the offer, even though the value of Illumina shares would have increased from the sale to Roche. The lawsuit asserts that because of a complex derivative transaction between Illumina and Goldman Sachs, Goldman Sachs stood to lose hundreds of millions if the Roche offer was accepted.

A spokewoman for Illumina and a spokesman for Goldman Sachs declined comment. A spokeswoman for Roche was not immediately available for comment.

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