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Roche-Illumina: Where it Stands

The AP reported this morning that Illumina has adopted a "poison pill" defense (formally known as a shareholder rights plan), which means that they're offering their shareholders the chance to buy additional shares at a discounted rate, in this case half-price, making a hostile takeover less attractive.

Illumina also has another defense already built in: a staggered board of directors that makes it difficult for Roche to replace more than 4 members in a year, Reuters reports.

A staggered board and a poison pill are typically good enough to deter a hostile takeover, but there's a loophole, according to Dealbook. The provisions for the staggered board are not in Illumina's corporate charter, but in their by-laws, which can be voted on.

This exact scenario came into play during Roche's 2007 hostile bid for Ventana Medical Systems.

If history is any indication, the Wall Steet Journal says, the deal will get done. Though several outlets (Marketwatch, The Street, Bloomberg) think that it will ultimately be at a higher price per share than the $44.50 currently on offer.

Look for the matter to be resolved no later than June, Dealbook says. That's the lastest Illumina is allowed the schedule its next annual meeting.

Illumina, of course, is best known for its genome sequencing instruments, notably the recently-introduced HiSeq 2500. Roche has an already substantial portfolio in the life sciences, extending from the pharmaceuticals market to genomics, proteomics, virus detection, and cancer diagnostics. 

For more on the potential deal:

An informative CNBC segment on the offer. 

A timeline of events from The Fly on the Wall.

Roche's homepage already has a pop-up about the potential deal, leading here.

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