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Complete Genomics Inc. to be acquired by Chinese firm
BGI-Shenzhen for $117.6 million
09-25-2012
EDIT CONNECT
SHARING OPTIONS:
MOUNTAIN
VIEW, Calif. and SHENZHEN, China—Complete
Genomics Inc., a
whole-human genomic sequencing company, and BGI-Shenzhen, a
leading international genomics company based in China, announced in
mid-September that they had entered into a definitive merger agreement. Based
on
the number of fully diluted outstanding shares of Complete Genomics, the
aggregate value of the transaction is approximately $117.6 million. In addition,
Complete Genomics and an affiliate of BGI have entered into an
agreement
pursuant to which Complete Genomics will be provided with as much as $30
million in bridge financing for its operations following the signing
of the
merger agreement.
Complete provides whole-human genome sequencing
that is one day
expected to become a mainstay of disease diagnosis and
treatment, while BGI operates international genome sequencing centers that
support genetic
research into agriculture, animals and humans. The combination
of the two companies is expected to bring together complementary scientific and
technological expertise and R&D capabilities, but the companies will not
merge into one unit. Instead, Complete Genomics will continue to be
operated as
a subsidiary company and its headquarters and operations will remain in
Mountain View, Calif.
"Complete has developed a proprietary whole
human genome sequencing technology that, together with other sequencing
platforms used by BGI, will fit well with our research and business
requirements and position Complete to become an even more successful global
innovator," said BGI's CEO, Dr. Wang Jun. "We look forward to growing the
business to improve medical research and, when clinical services are
provided,
support better disease diagnosis with tools that can be used by doctors and
hospitals to treat their patients."
The acquisition announcement comes a little more
than three months after Complete Genomics said it was
restructuring—a process
that resulted in more than 50 layoffs—and doing a review of strategic
alternatives that, at the time, ran the gamut from a
merger to a business
combination to an equity investment to a sale.
"With the assistance of our
advisors, we
engaged in a thorough review of a broad set of possible alternatives for the
company, and we believe the transaction with BGI represents
the best outcome
for our stockholders, offering them liquidity and a premium value," said
Dr. Clifford Reid, chairman and CEO of Complete Genomics.
"In addition, it
offers a great outcome for our customers, present and future. The combination
of the companies' resources provides an opportunity to
accelerate our vision of
providing researchers and physicians with the genomic information needed to
prevent, diagnose, and treat cancers and other
genetic diseases."
Complete Genomics' board of directors has
unanimously recommended that
stockholders accept the offer and tender their
shares. BGI's acquisition offer represents approximately a 54-percent premium
to the $2.04 closing
price per share of Complete common stock on June 4, the
last trading day prior to the California company's announcement that it was
undertaking an
evaluation of strategic alternatives.
BGI had already been on the lookout for a U.S.
sequencing
base before Complete Genomics essentially put itself up on the auction block, but with this acquisition, that goal to get a foothold in the
United States
is accelerated, wrote Isaac Ro, a Goldman Sachs analyst, in a
note about the deal, "giving BGI an immediate infrastructure and service
offering that
will complement the facilities in China."
Ro noted that BGI is tied significantly in terms
of
infrastructure to informatics and workflow technology from Illumina
Inc.—a
competitor to Complete Genomics—but he doesn't predict that BGI will shut down
existing Illumina labs in China but rather run them in
parallel with the Complete Genomics facility
in California and its rival technology.
On the other
hand, reporting by Bloomberg about
the deal points out that while Complete Genomics's sequencing technology gives
results slower than that of
Illumina, studies have shown that the it is more
accurate than Illumina's technology, and some market-watchers believe BGI would
like to have some
leverage over other vendors—leverage that having its own
in-house sequencing platform might provide.
Code: E09261201 Back |
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