Illumina and Pacific Biosciences have extended their merger agreement from last year and have agreed that Illumina will make monthly cash payments to sustain PacBio’s operations, according to a regulatory filing.
In a document filed with the US Securities and Exchange Commission, PacBio said that the original agreement from November 2018, under which Illumina plans to acquire PacBio for approximately $1.2 billion in cash, has been extended to Dec. 31, 2019. Originally, the companies had expected the deal to close by mid-2019. In addition, Illumina has the right to extend the agreement to March 31, 2020.
Furthermore, Illumina will make $6 million cash payments to PacBio on or before Oct. 1, Nov. 1, and Dec. 2 of this year. If it extends the agreement further, Illumina will also pay PacBio $6 million on or before Jan. 2, $22 million on or before Feb. 3, and $6 million on or before March 2 of 2020.
PacBio will use the payments to fund its continuing operations. If the merger is terminated and within two years of the termination PacBio is either acquired by another party or raises at least $100 million in equity or debt financing in a single transaction, PacBio may need to repay up to the full amount of the cash payments to Illumina.
The acquisition has been delayed by an antitrust investigation by the UK’s Competition and Markets Authority (CMA) to address concerns about reduced market competition.
Last month, PacBio said it expects the merger to be completed in the fourth quarter. In a regulatory filing, the company had also noted that Illumina may be required to pay it a reverse termination fee of $98 million if the deal is terminated under certain circumstances.
As of June 30, PacBio had $66.8 million in cash and investments