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Pacific Biosciences Rises as SoftBank Invests $900 Million

Pacific Biosciences says Softbank's $900 million investment 'validates our leadership position in the long-read DNA sequencing market.'
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Pacific Biosciences of California  (PACB)  was rising Wednesday after disclosing that the Tokyo investment firm SoftBank Group  (SFTBY)  will invest $900 million in the genetic analysis company.

Shares of Pacific Biosciences, Menlo Park, Calif., at last check were soaring 22% to $48.10. The company is scheduled to report fourth-quarter earnings on Wednesday after the market closes.

Under the terms of the investment, SB Management, a unit of SoftBank Group, will make the investment in convertible senior notes, which will have an initial conversion price of $43.50 a share of Pacific Biosciences.

Before the confirmation, a Cantor Fitzgerald analyst called the issuance “a solid vote of confidence” in the company’s platform, Bloomberg reported. 

SoftBank in January had acquired a roughly 6% stake in Pacific Biosciences.

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“This strategic investment by SoftBank validates our leadership position in the long-read DNA sequencing market and enables us to further accelerate our growth strategies,” Christian Henry, Pacific Biosciences' president and CEO, said in a statement.

Pacific Biosciences has a market value of $7.4 billion after a jump in its shares in recent months. That was sparked in part by a new joint venture with Invitae  (NVTA) , a medical-genetics company, The Wall Street Journal reported. 

The company, whose shares are up 11-fold since July, has also brought in new management, including a chief executive.

The company had unveiled a $1.2 billion merger with Ilumina  (ILMN)  in 2018, but the deal fell through after U.S. and U.K. authorities raised antitrust concerns. 

Pacific Biosciences received a $98 million reverse termination fee when the deal failed to go through. But now the company will have to return $52 million of the fee because the SoftBank investment is considered a change-of-control transaction.

“We are not concerned by this, as the investment from SoftBank would significantly increase PACB’s cash position (to over $1 billion from about $300 million currently) and help fund the company’s growth objectives,” Cantor Fitzgerald analyst Kyle Mikson said.