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Mergers & Acquisitions

Illumina to buy DNA sequencing competitor for $1.2 billion

Acquisition will add Pacific Biosciences’ long-read sequencing capabilities to Illumina’s portfolio

by Marc S. Reisch
November 2, 2018

20181102lnp5-pacbio.jpg
Credit: Pacific Biosciences
A technican prepares samples for DNA sequencing.

DNA sequencing leader Illumina has reached a deal to acquire its smaller rival Pacific Biosciences for $1.2 billion. The deal is Illumina’s largest since it spent $600 million in 2007 to buy Solexa, which brought with it the sequencing-by-synthesis technology on which Illumina’s main business is now based.

By acquiring PacBio, Illumina will reinforce its dominance in the DNA sequencing field. The technology is used for prenatal testing, to diagnose disease, and to enable the ancestry research services offered by companies like 23andMe.

PacBio stockholders will receive $8.00 per share, a nearly 80% premium to the stock’s closing price on Oct. 31, the day before the merger announcement.

The combination will have sales of about $3.7 billion and more than 6,600 employees. PacBio alone had sales of $93 million and 450 employees. The two expect their merger to be effective in mid-2019.

The deal adds long-read sequencing technologies to Illumina’s short-read capabilities, “paving the path to a more perfect view of a genome,” the two say. Short sequencing will accurately and economically answer the majority of genomic questions, the two say. But to answer more complex questions, Pacific Biosciences’ long-read technology can help fill in the gaps.

“Combining the two technologies positions us to reach more applications, accelerate the pace of genomic discovery, and bolster our innovation engine,” says Illumina CEO Francis deSouza.

The two firms expect the long-read sequencing market to grow from about $660 million in 2017 to $2.5 billion in 2022. The overall sequencing market, about $3.5 billion last year, will grow to $8 billion, they say.

Puneet Souda, a stock analyst at Leerink Research, says the combined firm will be better positioned to compete against other sequencing firms including China’s BGI Genomics and Oxford Nanopore Technologies. In addition, Souda expects that Illumina, a leader in bringing the cost of sequencing the human genome to under $1,000, “will apply its model of lowering cost ... and bring down the cost of long-read sequencing.”

Ultimately, Souda predicts, Illumina will offer an integrated system combining the two firms’ technologies.

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