Rumour of Thermo Fisher Scientific $30bn offer for Illumina

One analyst said any potential deal was unlikely

Thermo Fisher Scientific has reportedly made a $30bn bid for Illumina.

Speculation comes after StreetInsider cited an unnamed source claiming an offer had been made.

Neither company has commented on the rumours.

Thermo Fisher Scientific announced in May it was to buy FEI Company for $4.2bn to drive adoption of FEI’s technologies among its life sciences customers.

FEI has 3,000 employees and R&D, sales and manufacturing operations in Europe and the US.

Thermo Fisher also recently closed on its $1.3bn acquisition of Affymetrix.

Illumina FDA contract

Illumina was awarded a contract from the US Food and Drug Administration (FDA) to provide the agency with MiSeq sequencing systems and reagents for whole genome analysis on produce and produce-related environmental Salmonella and shiga toxigenic E. coli isolates in 2012.

The contract is worth up to $17m over five years.

Sequencing data is uploaded to the National Center for Biotechnology Information (NCBI) database.

NGS tools are enabling food science labs to identify the microbial strains associated with better tasting foods.

Sequencing-based metagenomics approaches are also being used to examine interactions between the gut microbiome and human health.

Analyst view

Bryan Brokmeier, an analyst with Cantor Fitzgerald, said in a note that it was unlikely that Thermo Fisher Scientific would attempt to acquire Illumina and if it does, it's unlikely a transaction would be completed.

“That said, if Illumina is a willing seller, then we believe that Roche may reconsider a bid, as may other potential acquirers (Danaher Corp and General Electric).”

Brokmeier said Thermo Fisher Scientific has a sequencing business, which it didn’t believe the firm was ready to give up on.

He gave reasons why Illumina may be unlikely to sell.

“Illumina has been a reluctant seller in the past and resisted a hostile takeover from Roche in 2012. Illumina’s CEO just took over the job on July 5, 2016, after joining the company as president three years ago and we believe he’s unlikely to sell so quickly after taking the helm.

“A $205 acquisition price is 15% below the company’s July 20, 2015 high of $242.37 and only a 21% premium to last night’s closing price – hardly enough to excite shareholders or a management team that have been reluctant sellers.”

The note recommended investors buy shares of Pacific Biosciences of California particularly if Thermo Fisher makes an offer for Illumina.

“We believe that a Thermo Fisher Scientific/Illumina transaction may create new interest in Pacific Biosciences of California by potential acquirers other than Roche, whom we continue to believe is the most likely acquirer of Pacific Biosciences of California.

“Agilent and PerkinElmer could leverage their expertise in NGS sample prep and bioinformatics to strengthen Pacific Biosciences of California’s throughput. Danaher Corp may also consider a move into the space to counter the strengthened Thermo Fisher Scientific portfolio.”

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