ZURICH - Swiss drugmaker Roche ROG.VX wrote to Illumina (ILMN.O) investors directly on Tuesday and urged them to accept its $5.7 billion bid, arguing that the U.S. gene decoder faces pressure on revenue and tough competition on its own.
Illumina has adopted a "poison pill" defense strategy for Roche's unsolicited cash bid and has advised shareholders not to tender any of their shares on the grounds the price is too low.
"We believe that our offer is full and fair and provides value certainty and liquidity to shareholders amid increasing headwinds for Illumina and the broader sequencing sector," Roche said in a letter to Illumina shareholders ahead of an annual shareholders' meeting on April 18.
Roche is digging in for a fight over its bid for Illumina, launched in January at $44.50 per share.
The Swiss company wants to unseat some Illumina directors whose terms expire at the meeting next month, and convince Illumina shareholders to expand the board to 11 members by adding two more Roche nominees.
That scenario would pave the way for Roche-nominated directors to comprise a majority of the board.
Roche on Tuesday laid out detailed arguments on why it feels Illumina shareholders would be better off accepting its offer.
"Looking at 2012 and 2013, Illumina will continue to face revenue headwinds due to uncertainty over government funding levels, corresponding hesitation to spend by institutional and academic customers, competition from innovative next generation sequencing devices and rapidly evolving novel sequencing technologies," Roche said.
Roche also said it would ask Chief Executive Jay Flatley to remain with Illumina should Roche ultimately manage to clinch the acquisition.
The San Diego-based company makes machines that decode a person's entire genome and would give Roche a leading position in the market for gene sequencing, which could help better identify which patients benefit from a given drug.
(Reporting by Katharina Bart; Editing by Erica Billingham and David Holmes)