The board of directors for Illumina Inc. is mulling over an unsolicited acquisition offer by Roche AG, of Basel, Switzerland, to purchase all outstanding shares in the San Diego-based genomics tools giant for $5.7 billion, or $44.50 per share in cash.

Illumina's genomics technologies dominate the life science tools landscape, and an acquisition by Roche would put powerful tools for genome sequencing, SNP genotyping, gene expression profiling, epigenetics and proteomics at the disposal of Roche's research and development arm – a decisive move in the direction of personalized medicine.

In a conference call Wednesday afternoon, Roche CEO Severin Schwan explained how Illumina's technology would complement Roche's pharmaceutical and diagnostics businesses. "It will allow us to strengthen our reputation as a leader in the worldwide diagnostics market," Schwan said, adding that the depth and breadth of its diagnostics technology would be a key differentiator in the marketplace.

Prior to its acquisition offer, Roche's diagnostic offerings included a range of tests for a variety of diseases drawing on a comprehensive set of technologies including immunoassay, PCR, microarray, sequencing and more.

Roche's diagnostic technologies are comprehensive. However, Illumina's sequencing assets are an attractive prize.

Having acquired Solexa Inc. in 2007, Illumina controls the Manteia Predictive Medicine sequencing platform, also called sequencing-by-synthesis. That technology forms the basis of Illumina's Genome Analyzer products, which are capable of generating up to 55 Gb (gigabases) per day.

An entire human genome can be sequenced using that technology for "several thousand dollars," according to Roche.

Roche estimated that the in vitro diagnostics market would grow from its current value of $1 billion to more than $2 billion in 2015. Driving the growth, it said, will be increased penetration into the research market and increased presence in the clinical market.

That means that self-contained sequencers like the Illumina Genome Analyzers will be making appearances in clinics where physicians could reasonably sequence an entire genome for a patient in order to tailor the right therapy for that patient.

The most common example of that type of personalized application currently is in cancer diagnostics, where therapies like Herceptin (trastuzumab), a breast cancer drug developed by Roche unit Genentech Inc., are available to patients who carry a genetic mutation that shows they have a good chance of responding to the treatment.

Piper Jaffray's William R. Quirk called the Roche/Illumina combination a "strategic fit," if Roche can find the right price.

"Illumina's board has rejected Roche's overtures and we suspect an offer greater than $44.50 (at least 25% higher or [about] $56) will be necessary to seal the deal, resulting in a potentially drawn out process (similar to Roche's acquisition of Ventana)," he wrote.

In 2007, Roche made a tender offer for Ventana Medical Systems Inc., of Tucson, Ariz., for $75 per share in cash, or a total of about $3 billion. Ventana's board rejected that offer, and eventually persuaded Roche to bump its offer to $89.50, or $3.4 billion, total.

Roche, in fact, compared the current acquisition offer to the Ventana deal.

Following that merger, Roche said it took Ventana products to a global framework, driving growth and retaining synergies. "It's exactly the same concept here," said Chief Operating Officer Daniel O'Day.

Analyst Jeffrey Holford, of Jefferies, wrote that the deal "looks strategically sound and accretive," but opined that the initial offer was opportunistic considering a recent decline in Illumina's share price. Holford, as well, predicted that Roche would have to increase its offer price in order to woo Illumina's shareholders.

Holford called out a pattern of behavior seen before when Roche set its cap for a diagnostics company that rebuffed its advances.

"As previously seen with Roche's acquisition of Ventana, this tender offer is the result of resistance from Illumina's management to reach a negotiated transaction with Roche," he said. "Accordingly, Roche has proposed a number of candidates for election to the board of Illumina at the 2012 shareholder meeting."

Roche also was not bashful about its intentions toward Genentech in 2009. That acquisition began with a public offer of $86.50 per share, but inched upward until Genentech agreed to $95 per share. The total amount of that deal was $46.8 billion.

Shares of Illumina (NASDAQ:ILMN) surged $17.47, or 46.3 percent, to close at $55. 15 Wednesday. The stock has traded as high as $79.40 per share within the last year.

Having gone through a rough patch recently – it missed its last quarterly sales goals and reduced its staff – the company's stock has been trading far lower than that level, leading to suggestions that Roche's timing was opportunistic.

Illumina's board has advised its stockholders to take no action while it reviews Roche's offer.