By Ilaina Jonas
NEW YORK, April 6 (Reuters) – A major shareholders advisory
service on Friday urged holders of U.S. gene sequenci ng company
Illumina to vote against rejected suitor Roche Holdings AG’s
proxy contest to expand Illumina’s board and fill it with its
own nominees.
Institutional Shareholders Services advised Illumina
shareholders to reject proposals from Swiss pharmaceutical giant
Roche, and agreed with Illumina’s board that the Swiss
pharmaceutical’s offer to take over the San Diego-based company
is inadequate.
“Because the revised offer of $51 is not yet demonstrably in
the range of a compelling starting point for negotiation, the
board appears to have acted appropriately in rejecting the Roche
bid,” ISS said in its report.
Last week, Illumina rejected the sweetened offer, raised
from a January offer of $44.50 per share, saying it dramatically
undervalued the company.
Roche responded by launching a tender offer and a proxy
contest to replace four Illumina directors with its own
nominees. It also offered a proposal to expand the board by two
additional seats and fill them with Roche nominees. If Roche is
successful on all these proposals, its nominees would comprise a
majority on the board.
Roche has said its offer is the highest ever for a company
in the sector. Illumina makes equipment that decodes a person’s
entire genome. A combination of the two companies would give
Roche a leading position in the promising market for gene
sequencing and fit snuggly with its large diagnostics business.
ISS said that traditional mergers and acquisition valuation
metrics are inadequate for “a company whose real potential – the
vast end markets, in and beyond heathcare, which are beginning
to turn to its technology – is all before it.”
