Illumina Shakes Off Roche’s Acquisition Offer

An influential shareholder advisory firm is recommending that Illumina (NASDAQ:ILMN) shareholders reject Roche Holding AG’s offer to buy the company.

Institutional Shareholder Services Inc. (NYSE:MSCI) advised Illumina shareholders to vote to reject Roche’s bid of $51 per share, or about $6.5 billion, claiming that the offer is inadequate. The biggest proxy advisory firm also said on Friday that Illumina shareholders should re-elect all of the company’s proposed directors rather than vote for director candidates proposed by Roche. Roche’s play for directorships would give the company control of Illumina’s board.

Roche publicly announced an offer to purchase Illumina for $5.7 billion, or $44.50 per share, in January. However, Illumina said the price was too low, prompting Roche to respond with a bigger offer in late March.

The instrument maker for genetic analysis asserts that the new offer remains insufficient, and accused Roche of taking advantage of a decline in the company’s share price in late 2010. Illumina adopted a “poison pill” shareholder rights measure intended to ward off unwanted attempts to acquire the company after Roche took its offer public.

The drug maker is disappointed with the ISS recommendation. Roche believes that the offer is a sufficient basis for talks between the companies, and said it would be willing to raise its bid if Illumina enter into start talks. Illumina shares closed at $52.33 on Thursday, and U.S. stock markets were closed Friday.