Swiss report: Roche may abandon Illumina bid

We're beginning to see soap opera-parallels in Roche's ($RHHBY) ongoing bid to buy Illumina ($ILMN). Here's why: Just a few days after the Swiss drug giant upped its offer for the San Diego-based gene sequencing company to nearly $6.7 billion, a Swiss newspaper is reporting that Roche may abandon its bid.

Uh-oh--a dramatic twist! But what brought this on? The news, as reported in SonntagsZeitung and summarized in a brief Bloomberg story, doesn't offer too much context. But the reason, if the report is credible, would come down to Roche not feeling compelled to pursue Illumina at all costs. The company, in Roche's eyes, ultimately is a "nice-to-have" acquisition and not a "must-have" deal, according to the SonntagsZeitung source cited by Bloomberg--a tried-and-true "unidentified person" who apparently has a close connection to Roche's board. (Start your guesses as to the source's identity.)

Not surprisingly, a Roche spokesperson declined to comment on the story.

The SonntagsZeitung story could be true, or an interesting footnote in the corporate rumor mill. Or, maybe a Roche exec "leaked" the news as a way to pressure Illumina and its shareholders to agree to a sale? Either way, while Illumina may be among the best possible acquisition targets through which Roche can expand its molecular diagnostics/personalized medicine capabilities, Illumina has heavily resisted Roche's unsolicited overtures, and the ongoing effort could be costly. It is also true that Roche has been patient with previous acquisitions, sometimes waiting for months until it ultimately wins. But Illumina is not the only gene-sequencing game in town.

To be continued…

- here's the Bloomberg story