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GEN News Highlights : Nov 13, 2006

Illumina-Solexa Merger Valued at $600M

Combination offers technology for genotyping, gene expression, and sequencing.

Illumina will acquire Solexa in a stock-for-stock merger in a total equity consideration of approximately $600 million. The companies report that together they represent the only firm with genome-scale technology for genotyping, gene expression, and sequencing. “This transaction adds next-generation sequencing to our core technologies, allowing us to integrate the essential applications in modern genetic analysis," remarks Jay Flatley, president and CEO of Illumina.

Illumina expects the merger will expand its genetic analysis product offering to include both analog and digital gene expression. Solexa developed a genetic analysis system for use in whole-genome sequencing, targeted resequencing, digital gene expression, and microRNA analysis. Illumina reports that the sequencing market opportunity is estimated at $1 billion, creating a market opportunity for the combined company in excess of $2.25 billion.

Solexa's stockholders will receive shares of Illumina common stock valued at $14 per Solexa share. The exchange ratio will be finalized at closing, which is expected by the end of the first quarter of 2007. The exchange ratio will be determined by dividing $14 by the volume weighted average trading price of Illumina common stock, according to NASDAQ, over 10 days randomly selected from the 20-day trading period that will end five trading days before closing. If the Illumina average price is equal to or greater than $47.30, the exchange ratio will be fixed at 0.296. If the Illumina average price is equal to or less than $40.70, the exchange ratio will be fixed at 0.344.

In addition, Illumina will invest $50 million in Solexa in exchange for newly issued Solexa shares, under a definitive securities purchase agreement. The companies predict that the merger will be modestly accretive in 2008 and significantly accretive thereafter.