November 13, 2006 |
1. | Why are Illumina and Solexa merging? | |
We believe the combination of Illumina and Solexa will create the only company with genome-scale technology for genotyping, gene expression and sequencing, the three cornerstones of modern genetic analysis. The merger is expected to: |
| Expand Illuminas genetic analysis product offering to include Solexas next generation sequencing platform, the 1G Genome Analyzer; | ||
| Create the only company to offer both analog and digital gene expression, enhancing Illuminas rapidly emerging gene expression franchise; | ||
| Add to Illuminas emerging opportunity in molecular diagnostics and content discovery; | ||
| Dramatically increase Illuminas addressable markets; | ||
| Drive Solexas manufacturing and commercialization; | ||
| Leverage Illuminas global sales and support infrastructure; and | ||
| Accelerate development of future products, leveraging the combination of core technologies. |
This transaction has the potential to expand Solexas and Illuminas penetration into complementary markets and will allow us to become a leading supplier of enabling tools to the life sciences industry. | ||
2. | Can you tell me about Illumina? | |
Illumina develops and markets next-generation tools for the large-scale analysis of genetic variation and function. The Companys proprietary BeadArray technology now used in leading genomics centers around the world provides the throughput, cost effectiveness and flexibility necessary to enable researchers in the life sciences and pharmaceutical industries to perform the billions of tests necessary to extract medically valuable information from advances in genomics and proteomics. This information will help pave the way to personalized medicine by correlating genetic variation and gene function with particular disease states, enhancing drug discovery, allowing diseases to be detected earlier and more specifically, and permitting better choices of drugs for individual patients. Headquartered in San Diego, CA, Illumina employs approximately 580 people and has a market value of more than $2.0 billion. The company reported revenues of approximately $73.5 million in 2005 and expects 2006 revenues of $178-182 million. See www.illumina.com for more information. | ||
3. | Why is this good for Solexa? | |
Illumina is the leader in genome-scale genotyping. We believe that Solexa will become the leader in genome-scale sequencing. Both companies have technologies for genome-scale gene expression. By combining our gene expression technologies, we believe we will be the only company that can offer both analog and digital approaches. By merging, we expect to become the only company with genome-scale technology for sequencing, gene-expression and genotyping, the three cornerstones of modern genetic analysis. Our goal is to become number one in all of genetic analysis. | ||
This transaction is about growth, and given the exciting potential of the combination, we anticipate there will be excellent opportunities for career growth and advancement for Solexa employees. Together, we expect to accelerate the commercialization of our 1G Genome Analyzer and the development of future products. |
4. | What are the plans to integrate the two companies? |
An effective, rapid integration is critical to the success of our merger. We will shortly establish a team with the responsibility of implementing an effective integration. Given the complementary nature of our companies and the solid teams at both Solexa and Illumina, we expect to realize the benefits of this transaction quickly and efficiently. Overall, we expect the combined company to be a stronger organization, poised for continued growth as a leader in our industry. Solexa will operate as a business unit of Illumina, continuing to operate out of the Hayward and Cambridge facilities. | ||
5. | How will staffing levels be established? Will there be any layoffs as a result of the merger? | |
This transaction is about growth and Illumina is very excited about adding the talent of Solexas employees to its team. We do not anticipate significant workforce reductions. In the short-term, as in any such transaction, there will inevitability be some overlap. We will work to minimize those effects through hiring limits and attrition. In cases where reductions are necessary, we will work to minimize the impact on affected employees. Its important to remember, however, that we believe the collective talents of Solexa and Illumina will make the combined company not just bigger but better and we expect there to be increased opportunities for our employees as we move forward and grow together. | ||
6. | What happens to each companys sales and support organizations? | |
We recognize the importance of a strong sales and support team. Since the product lines of both companies are highly complementary, we expect to benefit by combining both sales and support as soon as practical after the completion the merger. We will continue to deliver the world-class sales and support that our customers have come to expect. | ||
7. | Will our benefits and compensation change? | |
We remain committed to providing employees with a comprehensive and competitive benefits package that will allow us to attract and retain the talent we need to successfully drive the business forward. We will review the benefit programs of both companies in the next few months and will develop a plan to harmonize these plans following the close of the transaction. We will inform you well in advance of any changes. | ||
8. | What happens to our stock options? | |
Upon the closing of the transaction, all vested and unvested stock options will be converted into options of Illumina at the exchange ratio to be determined at close, with substantially the same terms and conditions, including vesting and term of exercise. | ||
9. | What role will John West play in the combined company? | |
John will be joining Illumina as Senior Vice President and General Manager of the Sequencing Business Unit. |
10. | How will this transaction affect our relationship with our customers? | |
This combination is expected to accelerate the commercialization and market expansion of the 1G through Illuminas worldwide direct sales and support network. The transaction is designed to expand Illuminas penetration into complementary markets, similar to how its acquisition of CyVera provided access to the lower multiplex, clinical diagnostics marketplace. Jointly, the companies R&D teams will have the tools to integrate genotyping and sequencing in unique ways, as well as take advantage of the discovery of novel content stemming from projects conducted on the companies platforms in the research and clinical markets. The combination is expected to allow Illumina to continue to drive industry-leading growth rates and profitability, while simultaneously becoming a more comprehensive supplier of tools to the life sciences industry. | ||
11. | How will this transaction affect our relationship with our suppliers? | |
We dont expect any change in how we conduct business. | ||
12. | How long before this transaction closes? | |
The transaction is subject to obtaining approval by Illumina and Solexa stockholders and customary closing conditions, including regulatory approvals and is expected to close before the end of the first quarter 2007. | ||
13. | What do we expect will happen during the period between today and the close of the transaction? | |
Although we will be working hard to develop a plan for integration, there are legal limits on what can be implemented before close. As such, we ask you to remain focused on delivering the 1G Genome Analyzer according to plan. We will make every effort to keep you informed about developments and progress throughout the approval process. | ||
14. | What am I allowed to say about this merger if I am asked about it by friends, family, customers, vendors, suppliers, the media, etc.? | |
Our business remains one where confidentiality remains a competitive advantage. If you are asked questions about this transaction, please limit your comments to information disclosed in public documents, such as the press release. You should not speculate on what will happen or give opinions on rumors about the transaction. If you have questions about what information can be disclosed, please contact John West. | ||
In addition, it is important that we speak with one voice on this topic. If you receive calls from the media, investors, or analysts, please forward those calls to Linda Rubinstein. |