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Complete Genomics Turns Down Competing Acquisition Offer Citing Antitrust Worries

NEW YORK (GenomeWeb News) – Complete Genomics last week turned down a higher bid from an unidentified company after determining that the unsolicited proposal potentially may not meet regulatory approval, the Mountain View, Calif.-based firm disclosed in a document filed with the US Securities and Exchange Commission today.

In the filing, Complete Genomics said that it received the unsolicited offer on Nov. 5 to acquire the company in cash for $3.30 per share, or about 5 percent more than the $3.15 that BGI-Shenzhen offered in September.

The bid from the company, identified only as "Party H" in the SEC document, would have been financed with cash on hand and would have proceeded without "any condition for further due diligence."

Complete Genomics provided a copy of the proposal to BGI the same day it received it, in accordance with the terms of the merger agreement between the two companies. Two days later, BGI's lawyer told Complete Genomics that BGI "did not believe that [Complete Genomics' board] could reasonably determine in good faith … that Party H's non-binding proposal constituted or could reasonably be expected to result in a superior proposal … because, among other reasons, there is a substantial likelihood that Party H's proposed transaction would not receive antitrust clearance."

The same day, Complete Genomics' board held a special meeting and unanimously determined Party H's proposal to be "inadequate, not in the best interests of the company's stockholders, and did not constitute a superior proposal" because it, like BGI, found that a merger between it and Party H would likely be rejected by regulators.

On Nov. 8, Complete Genomics Chairman and CEO Clifford Reid informed Party H of his firm's decision.

In the meantime, BGI's plan to buy Complete Genomics is being scrutinized by US regulators, and the Federal Trade Commission recently made a second request for additional information about the proposed $117.6 million acquisition.

In a research note published last week after Complete Genomics reported a 74 percent hike in third quarter revenues, William Blair analyst Amanda Murphy said, "Given the limited number of players in the commercial whole human genome sequencing services space — Illumina, Complete Genomics, and BGI — it is not surprising a second request was issued. Still, the FTC issues second requests in relatively few cases (about 4 percent to 5 percent of total transactions reported)."

Complete Genomics also said in its SEC document today that Reid agreed at the end of July to stay on at the company if and after the deal with BGI is completed. Complete Genomics will operate as a separate company and remain headquartered in Mountain View.

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