Roche has its sights set on Illumina, the San Diego based sequencing company. Roche CEO Severin Schwan has repeatedly emphasized the the need for new and better targeted drugs. Illumina would complement Roche beautifully – both with Genentech’s focus on targeted cancer therapies and Roche Diagnostics increasing work in companion diagnostics. Remember that Roche already has a sequencing business through their Applied Science business (mainly in Germany, Indy) and Roche 454 in Connecticut. Acquiring Illumina would make them a powerhouse in the sequencing business up against Life Technologies.
The move would also be a boon to San Diego’s life sciences landscape. In a brash display of their commitment, Roche has already announced a plan to move Roche Applied Science from Indianapolis to San Diego once the (potential) deal is complete.
But, this transaction will not go down without a fight. Illumina shares are off more than 60% from just 6 months ago. What would have cost Roche $10B or more can now be had for just over $5B. Roche says it was forced to go hostile after Illumina’s board failed to warm to its repeated overtures. “Roche has made multiple efforts to engage with Illumina in order to reach a negotiated transaction, but Illumina has been unwilling to participate in substantive discussions.” That usually translates into a simple standoff regarding price, with Illumina holding out for more than what Roche was willing to offer.
But let’s remember that Roche is very skilled – and stubborn- in this game. Their acquisition of Genentech was met with similar initial disdain only to be consummated more than a year later. Intent, resources and resolve: Roche has all three and will eventually get this deal done.
UPDATE: Roche discussed the potential deal in a conference call this morning. Webcast 1/25/12
