DNA sequencer makers Illumina and Pacific Biosciences of California called off their $1.2 billion merger that’s been in the works for over a year after the Federal Trade Commission (FTC) challenged the transaction and described it as “monopolist.”
“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,” the two companies said in a statement.
First announced in November 2018, the termination of the all-cash deal triggers a $98 million fee payment from Illumina to PacBio. Both companies sounded disheartened about the outcome, though PacBio perhaps a little less so.
“We are disappointed that our customers and other stakeholders will not realize the powerful advantages of integrating the sequencing capabilities of our two companies,” said PacBio CEO Michael Hunkapiller.
“With that said, we are confident in the future of Pacific Biosciences as we continue to pursue improved sequencing accuracy and throughput that can be utilized in an ever-expanding number of applications,” Hunkapiller added.
The FTC described the Menlo Park, California-based next-gen sequencing company as one that has worked to increase the accuracy and throughput of its readers over the years while also lowering their cost. This would put PacBio in position to make a dent in Illumina’s massive share of the global genomics hardware market, which hovers around 80%, the agency said last month.
In addition, the coupling of PacBio’s long-read sequencing products with Illumina’s faster short-read offerings would have potentially diminished the latter’s incentive to innovate and fill that gap in its portfolio on its own, the FTC said. In addition, the U.K. antitrust authority said it found competition concerns last October.
“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,” said Illumina’s president and CEO, Francis deSouza. In its 2018 proposal, Illumina said the market opportunity for long-read applications could reach about $2.5 billion by 2022.
“I’d like to thank our employees, as well as the Pacific Biosciences team, for their unwavering dedication and commitment throughout this process,” deSouza said. “Moving forward, we will continue to look for ways to increase the impact and benefit of sequencing technologies for researchers, clinicians, and most importantly, patients.”