Illumina's board of directors has taken the next expected step in the traditional dance of a company angling for a better offer from a hostile suitor. The board rejected Roche's $5.7 billion bid, urging its investors not to tender their shares. And Roche played its part, expressing its disappointment that the gene sequencing company "refuses to engage in substantive discussions."
"It is the Board's unanimous belief that Roche's offer dramatically undervalues Illumina and fails to reflect the value of the company's unique leadership position and future growth prospects," said CEO Jay Flatley. "Illumina has established itself as the innovation and market leader in tools for genetic analysis, with a proven track record of profitability and outperformance, resulting in significant value creation. Our industry is nascent, with the promise and potential to experience extraordinary growth in the years ahead as genetic information becomes broadly applied beyond molecular biology research, and into medical diagnostics, reproductive health and cancer management. As the growth of this industry accelerates, Illumina is singularly positioned to expand its market leadership, and to deliver value to our stockholders that is far superior to Roche's offer."
Translation: Bump your offer of $44.50 a share and we can talk.
As of mid-morning, Illumina's shares ($ILMN) were up a bit, treading at $52.27. That indicates that many investors still believe that once the two dancers go through their moves, Roche ($RHHBY) will decide to dig deeper to come up with a more tantalizing offer.