December 21, 2018
Illumina, a DNA sequencing company, will purchase competitor Pacific Biosciences (“Pacific”) for $1.2 billion (USD) in an all cash-transaction. This price represents a premium of 71% to Pacific’s 30 trading day volume weighted average share price as of the market close on October 31, 2018. The deal is expected to close in mid-2019.
Illumina is the company behind the machines that companies such as 23andMe and Ancestry rely on for their sequencing. The deal, made in an effort to corner the market in cutting-edge genetic research, is the largest Illumina has ever made. Illumina already had a market capitalization of $46 billion before the deal. According to Illumina’s chief executive officer, Francis deSouza, this deal should lead to further growth and, eventually, a “more perfect view of the genome”.
This move could allow Illumina to continue to dominate this industry space, as it will now have even fewer competitors. Some experts have opined that, since Pacific uses a different method to read strands of DNA, the acquisition of Pacific may fill a gap in Illumina’s current technology. Specifically, Pacific uses technology that looks at much longer strands of DNA known as “long reads,” whereas Illumina’s technology focuses on “short reads.” Long read technology, which is critical in developing a better understanding of diseases, can help to cover the gaps left by short read technology. For example, short read technology is often not as effective in certain applications including de novo sequencing and the sequencing of highly homologous regions of genomes.
This acquisition will open up the doors to significantly more research on these “long reads”. Michael Hunkapiller, Ph. D. and chief executive officer of Pacific, stated that “Illumina continues to democratize the use of sequencing at an unprecedented rate. Through this combination, thousands of researchers will now have direct access to this technology”.
These complementary technologies, once integrated, may offer customers deeper insight and understanding of their genetics.