The PacBio-Illumina Deal Looks More Tenuous Than Ever, But There May Be Alternatives

It’s increasingly clear that regulatory clearance for Illumina’s (ILMN) proposed acquisition of Pacific Biosciences (PACB) is, at best, only going to come at the cost of major concessions and it may well ultimately be the case that regulators will only approve the deal on terms that Illumina cannot afford to accept. PacBio certainly continues to trade as though the deal is highly unlikely, though I believe within that valuation there may be some undervaluation of the financial support Illumina will continue to provide, not to mention the prospect of alternative arrangements that come short of an acquisition but would still answer some of the strategic and financial needs of both parties.

I don’t know what sort of R&D partnerships and/or distribution deal the two companies could work out, but that now seems like a more likely outcome than the proposed merger. As I said in past articles, I no longer value PacBio with the merger in mind, but I do believe that the combination of the Sequel II ramp, cash from Illumina, and some sort of commercial relationship between the two companies can put PacBio on a path to viability (short term) and success (long term).

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The PacBio-Illumina Deal Looks More Tenuous Than Ever, But There May Be Alternatives