Illumina admits it’s the mystery company that made unsolicited bid for Complete Genomics

Illumina's competing bid for comes in at roughly 5 percent above BGI-Shenzhen's offer, but that premium isn't enough to woo Complete's management and board

Jeffrey Bouley
Illumina Inc. has revealed that it is the enigmatic"Party H" mentioned in a U.S. Securities and Exchange (SEC) document filed by CompleteGenomics Inc. in conjunction with the planned acquisition of the company by BGI-Shenzhen for approximately$117.6 million.
 
 
Or perhaps not so enigmatic, since CompleteGenomics had noted in the SEC document that it had declined the other offer—despitebeing for $3.30 a share, or about 5 percent higher than BGI's offer—because itdidn't feel regulators would allow such an acquisition. If that hadn't beenenough of a hint, Complete also wrote in the SEC document that CompleteGenomics and Party H are "each other's closest competitors for customers in theU.S. for whole-genome sequencing as an outsourced service."
 
 
But, if anyone didn't pick up on that hint, thecat's out of the bag now thanks to Illumina speaking up, and some market-watchersare speculating that Illumina's loose lips were no accident and may indicate anattempt to convince shareholders to pressure Complete to accept its moregenerous offer.
 
The Party H revelation, which came about in the form of anSEC filing by Illumina late Friday, Nov. 16, further seems to be aimed atwooing Complete shareholders by also noting that its offer was in cash and camewithout "any condition for further due diligence."
 
 
Whether or not Illumina really wants Complete'stechnology for itself, or simply wants to prevent BGI—one of Illumina's largestcustomers—from having an in-house technology comparable to what BGI currentlybuys from Illumina, is also a matter of speculation among market-watchers.
 
 
"[It] would make sense for Illumina topurchase [Complete Genomics] for [approximately] $100 million in order toprotect that annuity stream," noted Ross Muken of the InternationalStrategy & Investment Group in a research note.
 
 
There could be another strategy in mind amongIllumina's management and board, add Dan Leonard and Justin Bowers in aninvestor's note from Leerink Swann, who wrote that Illumina's efforts toacquire Complete Genomics could pay off for Illumina shareholders "in multipleways." On the one hand, they write, if Illumina "is successful in its effortsto acquire the company, it keeps a competitor out of the hands of its largestcustomer, BGI, and broadens its technology toolbox. If it is unsuccessful, itsinterest could lengthen the deal process and [Complete Genomics] couldeventually run out of money, which puts a competitor out of business."
 



Jeffrey Bouley

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