A U.K. competition watchdog recently began investigating Illumina’s planned $1.2 billion acquisition of Pacific Biosciences.
The Competition and Markets Authority, or CMA, said it’s examining whether the deal creates “a substantial lessening of competition.” By June 18, CMA will announce whether the merger triggers a more thorough phase-two analysis.
In response to a San Diego Business Journal request, an Illumina spokeswoman said, “Illumina does not comment on legal matters, but please note this is part of the normal regulatory review process.”
The company sees in Pacific Biosciences a way to gain a fuller view of the genome. Illumina specializes in “short read” technology that makes sense of DNA fragments, while Pacific Biosciences deciphers lengthier piece of DNA. Pacific Biosciences is headquartered in Menlo Park.
Under the Enterprise Act 2002, CMA has the power to review mergers in which the combined entity would provide at least 25 percent of services in the U.K., according to the agency. The San Diego Business Journal asked CMA whether it can stop the deal or prevent Illumina-Pacific Biosciences from selling goods in the U.K., which the agency didn’t address in a comment.
“So why is the United Kingdom the only country putting the acquisition under the microscope? Well, the U.K. is home to Oxford Nanopore Technologies, which is developing a novel long-read sequencing platform of its own utilizing nanopore technology,” wrote Maxx Chatsko with financial publication The Motley Fool.
Chatsko said Oxford’s nanopore sequencing — done through handheld devices — has advantages, but has to “overcome cost and accuracy concerns before translating that into a market advantage.”
When the Illumina-Pacific Biosciences deal was announced in November, analyst William Quirk with Piper Jaffray suspected Illumina would cite its minor share in long-read sequencing to allay regulator concerns.
Quirk said the tie-up would fill in gaps for Illumina, adding the company has the reach to quicken adoption of long-read technology. Pacific Biosciences struggled to commercialize its platform, racking up losses.
As part of recent quarterly results Illumina said the deal was on track to close midyear.
Illumina last year acquired San Diego’s Edico Genome for $100 million, speeding up Illumina’s ability to process DNA data.