Roche proposed to acquire all outstanding shares of Illumina Inc. for $44.50 per share in cash, or an aggregate of approximately $5.7 billion on a fully diluted basis. This offer represents a 64% premium over Illumina’s stock price on December 21, 2011 – the day before market rumors about a potential transaction between Roche and Illumina drove Illumina’s stock price significantly higher – a 61% premium over the one-month historical average and a 43% premium over the three-month historical average of Illumina’s share price, both as of December 21. It also represents a 30.1x multiple of Illumina’s projected forward earnings based upon analysts’ current consensus estimates for 2012.

Together, the capabilities of Roche’s Diagnostics Division and Illumina will strengthen Roche’s position in Sequencing and Microarrays to address the growing demand for genetic/genomic solutions. In addition, Roche’s extensive diagnostics experience and global presence will help accelerate the transition of DNA sequencing into clinical and routine diagnostics. DNA sequencing is expected to help to discover complex biomarkers that could become companion diagnostics and be paired with specific treatments in the long-term.

Severin Schwan, CEO of Roche Group, said, “Roche’s all-cash offer of $44.50 per share represents full and fair value for Illumina, and we expect that Illumina’s shareholders will welcome the opportunity to sell their shares at a significant premium to current market prices. It is our strong preference to enter into a negotiated transaction with Illumina, and we remain willing to engage in a constructive dialogue with Illumina to jointly develop an optimal strategy for maximizing the value of our combined business.”

Roche has made multiple efforts to engage with Illumina in order to reach a negotiated transaction, but Illumina has been unwilling to participate in substantive discussions. Roche has therefore decided to promptly commence a tender offer to purchase all of the outstanding shares of common stock of Illumina for $44.50 per share in cash. In addition, Roche will nominate a slate of highly qualified, independent candidates for election to Illumina’s Board of Directors and propose certain other matters for the consideration of Illumina’s shareholders at Illumina’s 2012 annual meeting, which, if adopted, would result in Roche-nominated directors comprising a majority of the Illumina board.

Daniel O’Day, COO, Roche Diagnostics Division, said, “The proposed acquisition will strengthen Roche’s current offering in the Life Science market by providing complementary solutions to our current portfolio. 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. In addition, by building on Illumina’s capabilities Roche will be able to use its scale, global distribution and diagnostic test development expertise to develop new diagnostic tests that serve patients and customers even more effectively.”

Roche intends to combine its existing Roche Applied Science business with Illumina and move the business area’s headquarters to San Diego, CA. Roche also plans to maintain operations in Penzberg, Germany, the current headquarters of Roche Applied Science.

In response, Illumina's Board of Directors adopted a Rights Agreement, pursuant to which one preferred stock purchase right will be distributed as a dividend on each share of the Company’s common stock held of record as of the close of business on February 6, 2012 (the “Rights”). Initially, the Rights will be represented by the Company’s common stock certificates, or by the registration of uncertificated shares of common stock in the Company’s share register, and will not be exercisable.

The Rights Agreement, which is designed to deter coercive or otherwise unfair takeover tactics, was adopted in response to the announcement by Roche of its unsolicited acquisition proposal to acquire all of the outstanding shares of Illumina’s common stock for $44.50 per share in cash.

“Consistent with its fiduciary duties, the Illumina Board has taken this action to ensure that our stockholders receive fair treatment and protection in connection with any proposal or offer to acquire the Company, including the proposal announced by Roche, and to provide stockholders with adequate time to properly assess any such proposal or offer without undue pressure while also safeguarding their opportunity to realize the long-term value of their investment in the Company,” said Jay Flatley, Chief Executive Officer of Illumina.

Johnson & Weaver, a San Diego-based law firm, announced its investigation of “possible breaches of fiduciary duty to shareholders” of Illumina and “other potential violations of law by the board of the company” related to the proposed Roche acquisition. The firm is looking into, among other things, whether Illumina’s board “breached its fiduciary duties by disregarding and responding unreasonably to Roche’s offer to acquire Illumina well above its market price.”

For its part, Illumina responded that its board of directors, “consistent with its fiduciary duties and in consultation with its financial and legal advisors, will thoroughly review the offer to determine a course of action that it believes is in the best interests of Illumina stockholders.”

Illumina added that, “The Board intends to advise stockholders of its formal position regarding the tender offer within ten business days by making available to stockholders and filing with the Securities and Exchange Commission a solicitation/recommendation statement on Schedule 14D-9. Illumina’s stockholders are advised to take no action at this time pending the review of the tender offer by the Company’s Board.”