NEW YORK ( TheStreet) -- With news breaking late on Tuesday of Roche's hostile $5.7 billion offer for Illumina (ILMN - Get Report), M&A watchers would be wise to remember a similar-sized deal that eventually turned a hostile and resulted in a new buyer and a 20% price increase.
In March, 2011, Valeant Pharmaceuticals (VRX) took a $5.7 billion bid for Cephalon directly to the company shareholders after management called the offer "opportunistic" and talks stalled. The move caused shares to surge above the $73 a share bid price.
While the bid eventually failed , optimistic investors were vindicated by a $6.8 billion competing bid from Teva Pharmaceuticals (TEVA), which valued the company at $81.50 a share.
That same dynamic may play out in Roche's offer for Illumina.Illumina shares rose nearly 43% to $53.89 in afternoon trading, roughly 20% more than Roche's $44.50 a share bid, indicating that investors expect an increase. While Roche's offer may be "opportunistic" as Illumina's management argues in a statement, the share surge could reflect an expectation that other suitors will enter the bidding fray now that the process is public. "We are increasing our price target for
For more on Illumina shares, see "8 biotech stocks to watch.
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