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Acquiring Solexa in $600M Stock Deal, Illumina Targets $2.25B Market for Combined Genotyping-Sequencing Platform

NEW YORK (GenomeWeb News) - Illumina today said it will acquire next-generation sequencing firm Solexa in a stock deal worth approximately $600 million.
 
Under the terms of the agreement, Solexa shareholders will receive Illumina common stock at $14 per share, and Illumina will invest $50 million in Solexa for newly issued Solexa shares.
 
Solexa’s shares were trading at $9.70 at market close on Friday and the company’s market capitalization was $354 million.
 
Illumina said the deal should close by the first quarter of 2007, although it is still subject to regulatory approval as well as that of both companies' stockholders.
 
Illumina claimed that the merger will create “the only company with genome-scale technology for genotyping, gene expression, and sequencing,” and estimated that the market opportunity for Solexa's genetic analysis system combined with its own technologies will be around $2.25 billion.  
 
Solexa CEO John West, who will join Illumina as senior vice president and general manager of the sequencing business, said that together the two companies "expect to reach and exceed the milestone of the $100,000 genome."
 
Illumina said it expects to retain Solexa's offices in Hayward, Calif., and in Cambridge, UK, and added that Illumina will add two Solexa board members to its board of directors.
 
Illumina expects the acquisition to be “significantly accretive” after 2008.
 
Solexa generated $4.2 million in revenues in 2005, although none of its revenues to date have come from its sequencing platform. Today, Solexa reported a 33-percent decrease in its third-quarter revenues.   

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