Illumina And Pacific Biosciences Announce Termination Of Merger Agreement

September 23rd, 2021

The CMA`s investigation had therefore provisionally concluded that the concentration would result in an SLC and that the merger would result in fewer incentives for the developing parties to compete, leading to a reduction in customer choice, an increase in prices (or a slowdown in the reduction of sequencing costs). Deterioration in quality, deterioration in the services provided and/or loss (or reorientation) of innovation. [footnote 4] The CMA can also verify the price of the target company and take into account the models used by the acquirer to assess the target. This is particularly important in dynamic markets where the assessment of the target business can also provide insight into the acquirer`s expectations for the future development of the target business (and to what extent the objective poses a competitive threat to the future growth of the acquirer). Although it is not decisive in this case, the work on the valuation model has been useful in understanding the high purchase price of $1.2 billion, creating sectors for future growth, as well as determining the expected future level of post-merger R&D and comparing them to the situation if the merger did not take place. In January 2020, the parties terminated the concentration. When announcing this decision, the companies mentioned a lengthy authorization process and “persistent uncertainty” caused by the auditors. Given the length of the administrative approval process to which the transaction has already been subject and the continued uncertainty as to the final outcome, the parties have decided that the termination of the agreement is in the best interests of their respective shareholders and employees. Pursuant to the merger agreement, Illumina Pacific will pay a termination fee of $98 million. A dynamic merger context may mean that the merging parties may focus in particular on the future development of the market and be able to compete through research and development and the publication of new products, as well as through prices. The CMA`s consideration of these non-tariff factors, in particular innovation approaches, is therefore essential to adequately protect customers in dynamic markets.. . .

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