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Analysts Pour Cold Water on Rumor of Thermo Fisher Making Acquisition Bid for Illumina

NEW YORK (GenomeWeb) – Following a report on Seeking Alpha that Thermo Fisher Scientific had made a $30 billion offer to acquire Illumina, a number of analysts said today that such a deal would be unlikely.

Both Thermo Fisher and Illumina declined to comment on the speculation.

In a research note, Cowen and Company analyst Doug Schenkel noted that such a deal would be "highly unlikely" for several reasons. The $30 billion offer would be less than a 20 percent premium to Illumina's stock price; a merger would raise antitrust issues; and such a deal would be difficult for Thermo Fisher to justify financially, Schenkel wrote.

Tim Evans, senior analyst with Wells Fargo, agreed that a deal would "encounter significant regulatory hurdles given that [Illumina] holds a near monopoly in high-throughput sequencing, and [Thermo Fisher] is the only current competitor with material scale in desktop sequencing."

Bryan Brokmeier, an analyst at Cantor Fitzgerald, added that Illumina would be unlikely to sell. Francis deSouza just took the reins as CEO of Illumina in July, he noted, and it would be surprising if he sold so quickly. In addition, he said, there is likely an "inflection point" in the clinical market that Illumina will recognize and that "isn't fully valued into the stock."

Thermo Fisher, meantime, would also be unlikely to want to acquire Illumina, Brokmeier wrote. Not only does the company have its own sequencing business, but it also recently acquired Affymetrix for $1.3 billion and is in the middle of a $4.2 billion acquisition of the microscope company, FEI Company.

Brokmeier noted that if Thermo Fisher does make an offer for Illumina, it could spur renewed interest in Pacific Biosciences by potential acquirers other than Roche, which has a partnership with PacBio, including PerkinElmer and Agilent Technologies.

In Thursday afternoon trade on the Nasdaq, shares of Illumina were up around 2 percent at $172.13 after climbing as high as $182.67 earlier in the day, while shares of Thermo Fisher were down around 1 percent at $153.29 on the New York Stock Exchange.

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