Pacific Biosciences of California (PACB) - Get Report 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.
“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) - Get Report, 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.
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.