The Latest Objections To The Illumina/Pacific Biosciences Tie-Up May Well Be Insurmountable

The United Kingdom's Competition and Markets Authority (that country's antitrust regulator, in essence) had already forwarded the Illumina (ILMN) - Pacific Biosciences (PACB) merger on to a Phase II review, but on July 19, investors got a look at the agency's reasoning, and it doesn't look good for the deal prospects. With the U.K.'s regulator insisting upon looking at short-read and long-read sequencing technology as effectively the same thing, the body has found that the deal would further consolidate a market already dominated by Illumina and potentially lock new entrants out of the market.

I do not agree with the CMA's assessment, but my opinion is beside the point. While the investigative process and hearings that are part of Phase 2 review will give Illumina and PacBio another chance to make their case that the two technologies are quite different, the tone of the report suggests an uphill climb. Consequently, while Illumina's $8/share offer to PacBio does still stand as a best-case near-term outcome, I believe it is more prudent to look at PacBio from a standalone perspective.

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The Latest Objections To The Illumina/Pacific Biosciences Tie-Up May Well Be Insurmountable