Roche takes £3.7bn tilt at US gene firm Illumina

Roche, the world's third-biggest drug maker, tabled a $5.7bn (£3.7bn) hostile approach for the US gene-sequencing firm Illumina yesterday, in the latest sign of Big Pharma's growing interest in "personalised medicine".

Illumina is working on ways to read people's DNA cheaply and quickly, enabling drug companies to tailor their medicines to particular groups of patients.

Switzerland's Roche said it had gone direct to Illumina investors with a $44.50-a-share deal, 18 per cent higher than Illumina's closing price on Nasdaq on Tuesday, because the San Diego company's board was "unwilling to participate in substantive discussions".

Shares in Illumina jumped more than 40 per cent to trade above $53 in late afternoon in New York yesterday, with analysts predicting that other suitors are now likely to emerge. The US company urged its shareholders to take no action for now.

Roche added that it planned to nominate its own directors to Illumina's board at its next annual meeting. The Swiss firm said the deal would help it to meet the accelerating demand for gene-based treatments and speed up the use of DNA research in medical diagnosis.

Insiders said that talks between the two pharma firms began in December, with Illumina turning down a $40-a-share offer from Roche earlier this month. While Roche has traditionally specialised in cancer drugs – making more than any other drug maker in the world – it has been using acquisitions to push into diagnostics.

Four years ago, it launched an ultimately successful hostile bid for another US diagnostics firm, Ventana. That deal was led by Severin Schwan, then head of Roche's diagnostics division, who has since become the Swiss drug maker's chief executive. Analysts yesterday noted that Roche's winning bid for Ventana was 19 per cent higher than its opening offer.

Daniel O'Day, the chief operating officer of Roche's diagnostics division, said: "Our ability to offer a total solution to researchers will help enable the discovery of complex new biomarkers improving drug discovery and the selection of patients most likely to respond to a targeted treatment with high clinical relevance."

The bankers set to share fees of up to $57m are Greenhill and Citigroup, which are advising Roche on the deal.