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Roche Files Proxy, Sends Letter to Illumina Shareholders

NEW YORK (GenomeWeb News) – Roche today said that it has filed a definitive proxy statement with the US Securities and Exchange Commission and sent a letter to Illumina's shareholders urging them to tender their shares in response to its $5.7 billion takeover bid.

It also urged Illumina's shareholders to vote in favor of Roche's nominees to Illumina's board.

Roche's letter follows Illumina's announcement yesterday that it had scheduled its annual shareholders meeting for April 18, and sent a letter to its shareholders urging them to vote in favor of Illumina's candidates for the board — which includes President and CEO Jay Flatley and Chairman William Rastetter — and not Roche's nominees.

Roche has proposed six new members for Illumina's board, which would increase Illumina's board size by two members. It hopes to replace Flatley, Rastetter, and two others as part of its hostile takeover attempt.

Roche offered $44.50 per share in a formal bid in late January and has not budged from the price, even though Illumina's board has rejected the bid and called it "grossly inadequate."

Illumina reiterated its stance yesterday. "We believe Roche's nominees have been nominated solely to facilitate Roche's acquisition of Illumina at a price that is inadequate to Illumina's stockholders," Illumina said in its letter to shareholders.

Roche detailed a variety of factors today that it believes provides evidence that its offer is "full and fair." Among those factors is Illumina's stock price decline in the second half of 2011, falling as much as 60 percent from a 52-week high of $79.40 reached last July. In addition, Roche said that Illumina's growth prospects have diminished due to increased competition in the sequencing space and a shift in customer preference to lower-cost instruments. It also cited limited visibility for the NIH's 2013 budget and Illumina's need to invest in global sales and marketing efforts as headwinds.

"Such diminished growth prospects are an indication that the challenges Illumina is facing reflect a new market reality and its lower share price as compared to early 2011 is not simply a short-term dislocation," Roche CEO Severin Schwan said in the letter today.

Roche said that it wants Illumina's shareholders to vote in favor of its slate of nominees, which it disclosed in late January, to encourage discussions with Illumina's management and enable a new board of directors to "determine objectively whether Illumina should be sold to Roche, to some other bidder or remain independent."

"After fulfilling its fiduciary duty to consider Illumina's opportunities, we would hope to promptly begin discussions with the new Illumina Board," Schwan said in the letter. "We also want Illumina's CEO, Jay Flatley, to be an active participant in those discussions and hope that he would choose to remain with Illumina after its acquisition by Roche."

In Tuesday morning trade on the Nasdaq, shares of Illumina were down 1 percent at $49.10.

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