In a battle that will shape the market for DNA sequencing services, sequencing company Complete Genomics has received letters from rival suitors. Illumina, a dominant supplier of high-throughput DNA sequencing machines, and BGI, a giant sequencing-services firm, have both offered to purchase the Mountain View, California-based company, which has highly accurate, proprietary technology for sequencing human genomes.
Complete Genomics accepted BGI’s merger offer in September, but the deal still requires US regulatory approval. In addition, shareholders have filed suit to block the deal, saying that BGI’s purchase price of US$3.15 per share is too low.
Today’s letter from China-based BGI-Shenzhen says that its offer is in the best interest of stockholders, customers, and employees and argues that the offer from Illumina, based in San Diego, California, to buy Complete Genomics is intended merely to eliminate competition. “It is a thinly veiled attempt by Illumina to disrupt and interfere with our Merger Agreement in order to prevent Complete’s technology from posing a competitive threat to Illumina’s market dominance,” wrote BGI chief operational officer Ye Yin in a letter that also accuses Illumina of hypocrisy and knowingly making false assertions.
Yin also refuted allegations that the deal raised US national security issues, noting that BGI has been a major purchaser of Illumina machines and reagents and is a private company, not a state-owned enterprise.
BGI’s letter is a response to one sent last week by Illumina that touted the merits of its unsolicited proposal: a 5% premium over BGI’s bid and no need for approval by a US committee that considers foreign investment. What’s more, pointed out Illumina chief executive Jay Flatley, BGI’s proposal still requires receipt of financing and other approvals that had still not been completed two months after Complete Genomics and BGI announced their agreement.
Experts at Leerink Swann have noted that the offer makes sense for Illumina. If the deal goes through, Illumina keeps a competitor away from a large customer and expands its technology.
Several sequencing platforms are on the market, including ones made by 454, Life Technologies and Pacific Biosciences, and other technologies are in development (see ‘The battle for sequencing supremacy’; subscription required). However, Illumina, which successfully fought off a takeover bid earlier this year, dominates the space. The company itself claims that more than 90% of sequencing data comes from its machines. When the agreement between BGI and Complete Genomics was first announced, researchers largely welcomed it, saying that it would encourage competition and keep a valued technology available.
Meanwhile, Complete Genomics and Illumina are engaged in a patent dispute. In another announcement today, Illumina said that a judge would reconsider an earlier ruling that invalidated claims in one of its patents, which Illumina believes Complete Genomics has infringed upon.