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CFO: No stock buybacks for Roche. Let's make a $7B deal instead

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Roche CFO Alan Hippe

Don't count Roche ($RHHBY) in on the stock-buyback trend. The Swiss drugmaker would rather spend its money on acquisitions of up to $7 billion. Or so CFO Alan Hippe tells Bloomberg Industries analysts, piquing curiosity about likely targets.

Hippe's comments come as reports surface of another run at the gene-sequencing firm Ilumina ($ILMN). As Bloomberg reports, a Swiss newspaper says Roche may have agreed to buy Illumina for $66 per share, a big leap from its earlier $51 per share offer. It's also outside the range Roche appeared willing to pay; at least one analyst deemed the higher bid "highly unlikely." The company wouldn't comment.

This Illumina rumor carries at least a small kernel of truth. Hippe told the analysts that Roche would pay up to $6 billion to $7 billion on companies with innovative technologies, such as gene sequencing. He's also shopping for smaller product deals to add to Roche's line-up.

Meanwhile, the company is using its cash to pay down debt, Hippe said. Bloomberg says Roche is the most leveraged drugmaker in Big Pharma, at least for now.

Roche's anti-buyback stance is unusual in the drug industry these days. Eli Lilly ($LLY) just announced another $1.5 billion buyback program, while Amgen ($AMGN) announced a $5 billion program last year. Teva Pharmaceutical Industries' ($TEVA) board authorized $3 billion in repurchases a year ago. And Pfizer ($PFE) is planning $10 billion in buybacks. One other exception: AstraZeneca ($AZN), whose new CEO, Pascal Soriot, halted the company's buyback program his first day on the job, possibly to conserve cash for acquisitions.

- read the Bloomberg story

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