Illumina to buy Solexa for about $600M

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Illumina Inc. said Monday it will buy Solexa Inc. for about $600 million.
San Diego-based Illumina is offering about $14 a share in its stock for every share of Hayward-based Solexa (NASDAQ:SLXA - News).

At Solexa's Friday closing price, the offer represents a 44 percent premium. Solexa shot up to $12.90 in midday trading upon the news. Illumina stock was down about 8 percent to $40.36.

In addition to the stock, Illumina has agreed to invest $50 million in Solexa in exchange for newly issued Solexa shares, subject to customary closing conditions.

Along with its Hayward headquarters, Solexa has operations in Cambridge, England. The company developed a genetic analysis system for use in whole genome sequencing, targeted resequencing, digital gene expression and microRNA analysis.

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

Illumina said it expects to maintain Solexa's operations in both California and Cambridge, and two members of Solexa's board will join the Illumina board.

Solexa Monday reported it narrowed its third-quarter loss to $9.9 million, or 27 cents per share, for the third quarter ended Sept. 30, compared with a net loss of $10.8 million, or 43 cents per share, for the same quarter in 2005.

Analysts polled by Thomson Financial expected a loss of 23 cents per share.

Total revenue for the quarter was $569,000, compared with revenue of $844,000 a year earlier.

The San Diego based Biotechnology company closed trading today (NASDAQ:ILMN) down 11.5%.