Illumina and Pacific Biosciences terminate $1.2bn deal
Gene-sequencing companies Illumina and Pacific Biosciences (PacBio) have “mutually agreed” to terminate their $1.2 million merger agreement, under which Illumina would have acquired PacBio.
“Considering the lengthy regulatory approval process the transaction has already been subject to and continued uncertainty of the ultimate outcome, the parties decided that terminating the agreement is in the best interest of their respective shareholders and employees,” said the announcement, shared yesterday, January 2.
The buy, announced in November 2018, would have been the largest deal that Illumina has made in its 20-year history, according to Forbes. Illumina will now pay PacBio a termination fee of $98 million.
Francis deSouza, president and CEO of Illumina, said: “We believe this proposed combination would have broadened access to Pacific Biosciences sequencing technology, significantly expanded and accelerated innovation, and ultimately increased the clinical utility and impact of sequencing.”
PacBio’s DNA sequencers look at a single molecule of DNA and decode long stretches of it, while Illumina uses short-read sequencing by reading tiny fragments of DNA and assembling them.
Michael Hunkapiller, CEO of PacBio, added: “We are disappointed that our customers and other stakeholders will not realise the powerful advantages of integrating the sequencing capabilities of our two companies.”
In mid-December, the Federal Trade Commission (FTC) voted to file an administrative complaint and authorise staff to seek a temporary restraining order and preliminary injunction in federal court to stop the proposed acquisition.
Yesterday, Gail Levine, deputy director of the FTC’s bureau of competition, stated: “This deal threatened to let a monopolist extinguish nascent competition in a growing health care market: next-generation DNA sequencing.”
Levine added that, because the acquisition has been abandoned, customers will now continue to benefit from the independent innovative efforts of these companies to “develop faster, better, and less expensive next-generation DNA sequencing technologies”.
The UK’s Competition and Markets Authority (CMA) had also been conducting a merger investigation. In July 2019, the CMA launched a phase two enquiry, after initial competition concerns led to the proposed merger being referred to a group of independent CMA panel members for an in-depth investigation.
A few months later, in October, the CMA provisionally found that the merger would result in a significant loss of competition between the two companies, with few alternative providers of DNA sequencing systems remaining, and that the loss of PacBio as an independent competitor would lead to a reduction in overall levels of innovation in the market.
At the time, the CMA proposed that blocking the merger would be the only way to address its concerns.
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