28.
|
Will you pursue other acquisitions? Will you consider other targets if you don’t succeed with your offer?
|
|
·
|
We’re confident that both Illumina’s Board and Illumina’s shareholders will see the compelling value of our offer.
|
29.
|
What is Roche’s acquisition strategy?
|
|
·
|
We are always looking for ways to strengthen our two businesses, Pharma and Diagnostics, and thus continue to go for very focused, bolt-on acquisitions, small and mid-sized acquisitions which complement our various platforms and products.
|
30.
|
What happens to the patents and technology?
|
|
·
|
Roche anticipates that Illumina’s patents and technology would be acquired as part of any transaction that is consummated.
|
31.
|
What does this transaction say about current profitability trends in the Diagnostics business?
|
|
·
|
Roche remains committed to growth in sales and profit for the Diagnostics Division. The proposed transaction would be accretive to core EPS and operating profit in the first year post-close.
|
|
·
|
The planned transaction enables Roche access to a solid business with strong cash flow and margins
.
|
32.
|
Is the price you are offering appropriate given this is an acquisition of research technology?
|
|
·
|
The opportunity is much larger than the research technology component.
|
|
·
|
The ongoing rapid evolution of technology transforms sequencing into an increasingly powerful, usable and affordable research tool.
|
|
·
|
There is strong potential for adoption of sequencing solutions into clinical and routine diagnostics settings for the benefit of patients.
|
|
·
|
Together, Roche and Illumina will be able to provide innovative research and drug discovery capabilities and develop new therapeutics and companion diagnostics.
|
33.
|
Has Illumina provided a rationale for why they did not agree to a friendly takeover?
|
|
·
|
We will not speculate or speak on behalf of Illumina.
|
34.
|
Which members of the senior management were involved in approaching Illumina?
|
|
·
|
We will not comment on the specifics of our discussions.
|
35.
|
According to the Credit Suisse analyst report dated December 14, 2011, there is a correlation between the stocks in this sector and American GDP growth. Does your offer for Illumina reflect a point of view on the U.S. economy?
|
|
·
|
No, our interest is because Illumina complements our Life Science portfolio, as well as the potential to accelerate the transition of sequencing into clinical and routine diagnostics and long-term implications for biomarker research
.
|
36.
|
Have you considered spinning off the Applied Science business from the Diagnostics business?
|
|
·
|
No. Roche Applied Science is an integral part of our strategy
.
|
Financial
37.
|
How significant is this transaction for Roche compared to other historical acquisitions in the past decade? What are Roche’s other recent acquisitions and how much did they cost?
|
|
·
|
This transaction is considered to be a strategic acquisition.
|
|
·
|
During the last 12 months Roche has acquired four companies with acquisition costs above CHF 0.5 bn.
|
38.
|
Why is Roche raising its offer to $44.50 as compared to previous (non-public) communications with Illumina?
|
|
·
|
Roche will not discuss specifics of the process. However, we believe this price is full and fair.
|
39.
|
Why are you structuring the offer as 100% cash?
|
|
·
|
Cash provides a clear and certain value to shareholders.
|
|
·
|
Roche’s proposal of $44.50 per share is a full and fair price which offers a substantial premium for Illumina shareholders in an all cash transaction
.
|
40.
|
What will be the implications on your cash flow?
|
|
·
|
We expect the transaction to be accretive to our operating free cashflow.
|
41.
|
What impact will this transaction have on margins in your diagnostics business?
|
|
·
|
This transaction is expected to have a positive impact on our core operating profit margins.
|
42.
|
What will be the upfront costs to achieve synergies?
|
|
·
|
It is too early to determine.
|
43.
|
What impact is this transaction expected to have on your credit ratings?
|
|
·
|
Roche is working with rating agencies but cannot predict their decisions
.
|
44.
|
How will the transaction be financed?
|
|
·
|
Roche's proposal is not subject to any financing contingency. The proposed transaction will be financed from available cash on its balance sheet and borrowings under its credit facilities and therefore will not require a financing condition.
|
45.
|
What impact will a potential transaction have on your 2012 outlook?
|
|
·
|
Impact on core earnings is expected to be positive.
|
General Transaction and Process
46.
|
What percentage of Illumina shares will need to be tendered to meet the minimum condition?
|
|
·
|
A majority of Illumina’s shares of common stock, on a fully diluted basis, must be tendered into Roche’s offer.
|
47.
|
By when must Illumina’s shareholders respond to the offer?
|
|
·
|
Roche’s offer gives Illumina shareholders immediate, certain value for their shares.
|
|
·
|
Roche’s offer price of $44.50 per share in cash represents a substantial premium to Illumina’s unaffected market prices: a premium of 64% over Illumina’s closing 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.
|
|
·
|
Since market rumors surfaced on December 21, trading and option volume in the stock have been above average.
|
|
·
|
It also represents a 30.1x multiple of Illumina’s projected forward earnings based upon analysts’ current consensus estimates for 2012.
|
|
·
|
Please refer to the tender offer documents after their filing with the SEC.
|
48.
|
How can the regulatory process be influenced by Roche?
|
|
·
|
The regulatory approval process is conducted independently by the relevant U.S. and foreign regulatory agencies.
|
|
·
|
We believe the competitive landscape is robust in this space.
|
49.
|
When will the regulators make a decision regarding antitrust?
|
|
·
|
The offer is subject to customary closing conditions. We will make the necessary regulatory filings as soon as possible.
|
|
·
|
The regulatory approval process is conducted independently by the relevant U.S. and foreign regulatory agencies.
|
|
·
|
We believe the competitive landscape is robust in this space.
|
50.
|
Does the offer require Roche shareholder approval?
|
51.
|
Has Roche’s Board approved this proposal?
|
|
·
|
Yes, the proposal has been approved by Roche’s board.
|
52.
|
What external advisors are working with Roche in connection with its proposal?
|
|
·
|
Greenhill & Co., LLC and Citigroup Global Markets, Inc. are acting as financial advisors to Roche and Davis Polk & Wardwell LLP is acting as legal counsel.
|
Management/Operations
53.
|
What will happen to Illumina employees? Do you expect that there will be any layoffs? How many employees will be affected?
|
|
·
|
Until a transaction has occurred and all necessary approvals have been granted, Roche and Illumina will continue to conduct their respective businesses as independent companies.
|
|
·
|
This transaction is not driven by cost synergies, but by the strategic value of Illumina’s business and its growth potential within Roche.
|
|
·
|
Illumina will maintain its unique innovative, flexible, and scalable approach to supporting a wide group of genetic researchers.
|
|
·
|
Roche’s “hub-and-spoke” model of acquisitions has allowed previously acquired companies to operate with significant independence and flexibility.
|
|
·
|
There will be significant opportunity for greater long-term success for Illumina employees and stakeholders as part of a larger, more global organization.
|
|
·
|
Roche intends to combine its existing Roche Applied Science business with Illumina and move the business area’s headquarters to San Diego, California. Roche also plans to maintain operations in Penzberg, Germany, the current headquarters of Roche Applied Science.
|
|
·
|
We see significant growth potential for Illumina as part of Roche, providing additional employment opportunities.
|
54.
|
What will happen to Roche employees? Do you expect that there will be any layoffs? How many employees will be affected?
|
|
·
|
This transaction is not driven by cost synergies, but by the strategic value of Illumina’s business and its growth potential within Roche.
|
|
·
|
Roche intends to combine its existing Roche Applied Science business with Illumina and move the business area’s headquarters to San Diego, California. Roche also plans to maintain operations in Penzberg
,
Germany, the current headquarters of Roche Applied Science.
|
|
·
|
Until a transaction has occurred and all necessary approvals have been granted, Roche and Illumina will continue to conduct their respective businesses as independent companies. It is therefore premature to comment in detail.
|
|
·
|
Roche is a world-class employer, who treats all employees with respect.
|
55.
|
Who will serve on the management team of the combined company? What will their roles be? Will you consider Illumina management for senior management roles at the combined company?
|
|
·
|
Roche intends to combine its existing Roche Applied Science business with Illumina and move the business area’s headquarters to San Diego, California. Roche also plans to maintain operations in Penzberg
,
Germany, the current headquarters of Roche Applied Science.
|
|
·
|
Roche contemplates continued employment of Illumina management and employees following the consummation of a transaction and we are prepared to work with Illumina to develop mutually satisfactory employment arrangements.
|
56.
|
Will Roche retain Illumina’s executive management?
|
|
·
|
Until a transaction has occurred and all necessary approvals have been granted, Roche and Illumina will continue to conduct their respective businesses as independent companies. It is therefore premature to comment in detail.
|
|
·
|
Roche believes Illumina has a world-class management team that will be excellent complements to Roche Diagnostics.
|
57.
|
Will you keep the Illumina brand? The Roche brand?
|
|
·
|
We intend to continue the Illumina legacy within the Roche Diagnostics Division, and to maintain the Illumina brand.
|
58.
|
The headquarters of Applied Science will move to San Diego. Why don’t you stay in Germany?
|
|
·
|
Roche plans to maintain operations in Penzberg, Germany.
|
|
·
|
Until a transaction has occurred and all necessary approvals have been granted, Roche and Illumina will continue to conduct their respective businesses as independent companies. It is therefore premature to comment in detail.
|
59.
|
Will the salary and/or benefits of Illumina employees be affected?
|
|
·
|
Until a transaction has occurred and all necessary approvals have been granted, Roche and Illumina will continue to conduct their respective businesses as independent companies. It is therefore premature to comment in detail.
|
60.
|
How will R&D and product development be impacted?
|
|
·
|
Sequencing
continues to be
a strategic focus
.
|
|
·
|
This transaction is not driven by cost synergies, but by the strategic value of Illumina’s business and its growth potential within Roche.
|
|
·
|
Sequencing is very important to Roche and will continue to fuel R&D in this area.
|
61.
|
Will you retain Illumina’s R&D agreements with third parties?
|
|
·
|
We expect to honor all contracts in place before the transaction.
|
|
·
|
Until a transaction has occurred and all necessary approvals have been granted, Roche and Illumina will continue to conduct their respective businesses as independent companies. It is therefore premature to comment in detail.
|
62.
|
Will you establish Life Cycle Management in Illumina?
|
|
·
|
Illumina has been very successful operationally and we are committed to maintaining the best processes from both companies.
|
|
·
|
This transaction is not driven by cost synergies, but by the strategic value of Illumina’s business and its growth potential within Roche.
|
63.
|
What do I have to consider when dealing with Illumina before the close of a transaction? What can I say to my customers?
|
|
·
|
Until a transaction has occurred and all necessary approvals have been granted, Roche and Illumina will continue to conduct their respective businesses as independent companies.
|
64.
|
Is Roche currently in discussions with Illumina regarding integration?
|
|
·
|
No. Until a transaction has occurred and all necessary approvals have been granted, Roche and Illumina must continue to conduct their respective businesses as independent companies.
|
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
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