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Illumina Signs Definitive Agreement to Acquire Solexa
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Illumina Signs Definitive Agreement to Acquire Solexa

Illumina Signs Definitive Agreement to Acquire Solexa
News

Illumina Signs Definitive Agreement to Acquire Solexa

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Illumina, Inc. and Solexa, Inc. have announced that they have entered into a definitive merger agreement under which Illumina will acquire Solexa in a stock-for-stock merger.

Under the merger agreement, which was unanimously approved by the Boards of Directors of both companies, Solexa's stockholders will receive, subject to certain "collar"provisions, shares of Illumina common stock valued at $14.00 per Solexa share, which represents a total equity consideration of approximately $600 million.

In addition, Illumina has entered into a definitive securities purchase agreement with Solexa in which Illumina has agreed to invest $50 million in Solexa in exchange for newly issued Solexa shares, subject to customary closing conditions.

Headquartered in Hayward, CA, with substantial operations in Cambridge, England, Solexa has developed a proprietary, next generation genetic analysis system for use in whole genome sequencing, targeted resequencing, digital gene expression and microRNA analysis.

The market opportunity in sequencing is estimated at $1 billion, creating a market opportunity for the combined company in excess of $2.25 billion.

Together, Illumina and Solexa will create the only company with genome-scale technology for genotyping, gene expression and sequencing, the three cornerstones of modern genetic analysis.

The merger is expected to:

- Expand Illumina's genetic analysis product offering to include Solexa's next generation sequencing platform, the 1G Genome Analyzer;

- Create company to offer both analog and digital gene expression, enhancing Illumina's gene expression franchise;

- Add to Illumina's emerging opportunity in molecular diagnostics and content discovery;

- Increase Illumina's addressable markets;

- Drive Solexa's manufacturing and commercialization;

- Leverage Illumina's global sales and support infrastructure; and

- Accelerate development of future products, leveraging the combination of core technologies.

"Illumina is at the forefront of advanced genetic analysis, with the goal of providing the tools to understand the molecular basis of disease," said Jay Flatley, President and Chief Executive Officer of Illumina.

"This transaction adds next generation sequencing to our core technologies, allowing us to integrate the essential applications in modern genetic analysis."

"This unique genetic analysis portfolio addresses the fastest growing segments of the life sciences market and will speed our customers' quest to understand, cure and ultimately prevent disease."

Illumina and Solexa anticipate that the 1G Genome Analyzer and future products will enable researchers to conduct whole genome resequencing, targeted resequencing and other applications at unparalleled throughput and costs, much as the BeadArray products have revolutionized the genotyping field.

This combination is expected to accelerate the commercialization and market expansion of the 1G through Illumina's worldwide direct sales and support network.

Additionally, it will expand Illumina's penetration into complementary markets, similar to how its acquisition of CyVera provided access to the lower multiplex, clinical diagnostics marketplace.

Jointly, the companies' R&D teams will have the tools to integrate genotyping and sequencing in unique ways, as well as take advantage of the discovery of novel content stemming from projects conducted on the companies' platforms in the research and clinical markets.

The combination is expected to allow Illumina to continue to drive growth rates and profitability, while simultaneously becoming a comprehensive supplier of tools to the life sciences industry.

John West, Chief Executive Officer of Solexa, who will be joining Illumina as Senior Vice President and General Manager of the Sequencing Business, said, "This transaction is expected to provide significant benefits to Solexa stockholders, customers and employees. I am very excited about the opportunity that Solexa's combination with Illumina presents."

"Illumina brings proven business systems, world-class sales and support infrastructure and significant experience in managing products poised for substantial growth. I expect these attributes will help rapidly deploy Solexa's next generation sequencing platform."

"I am delighted to be joining the Illumina team and look forward to capturing the significant synergies between our technologies and our companies. Together we expect to reach and exceed the milestone of the $100,000 genome."

Under the terms of the merger agreement, Solexa stockholders, option holders and warrant holders will receive newly issued shares of Illumina common stock, options and warrants, respectively, for their Solexa shares, options and warrants, in each case, based on an exchange ratio to be determined at closing.

This exchange ratio will be determined by dividing $14.00 by the volume weighted average trading price of Illumina common stock as reported by NASDAQ during 10 randomly selected days during the 20-day trading period ending five trading days prior to closing of the merger (the "Illumina Average Price").

However, if the Illumina Average Price is equal to or greater than $47.30, then the exchange ratio will be fixed at 0.296, and if the Illumina Average Price is equal to or less than $40.70, then the exchange ratio will be fixed at 0.344.

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