Illumina (Nasdaq:ILMN) announced today that it plans to appeal the Federal Trade Commission’s (FTC) decision over its acquisition of Grail.
The FTC today announced that it finds the $7.1 billion acquisition “likely to substantially reduce competition” in the U.S. It would affect the research, development and commercialization of cancer tests, FTC said.
In its decision, the FTC ordered Illumina to divest Grail “to protect competition” in the market.
San Diego-based Illumina plans to file a petition for review “promptly” with the U.S. Court of Appeals, according to a news release. It also intends to seek expedited treatment of its appeal. The FTC’s order to unwind the acquisition will be automatically stayed pending appeal, the company said.
The history behind Illumina’s attempt to acquire Grail
Illumina’s acquisition of Grail, a cancer detection technology developer, has seen its fair share of scrutiny. In September 2020, Illumina agreed to acquire Grail, a startup that initially spun out from the company in 2016.
Illumina completed the acquisition in August 2021. It agreed to hold Grail as a separate company as the European Commission conducted a regulatory review. Illumina argued Grail has no business in Europe. The company said the review is out of the European Commission’s jurisdiction.
In September, the European Commission issued a decision prohibiting the planned acquisition.
That roadblock came shortly after the FTC Chief Administrative Law Judge’s (ALJ) decision favored Illumina in a decision. An administrative law judge in the U.S. rejected the Federal Trade Commission’s argument that the $8 billion acquisition of Grail is anti-competitive.
Reports surfaced in January of this year saying Illumina may face a heavy penalty in Europe for completing its acquisition of Grail. Reuters reported that Illumina most likely faces a fine totaling 10% of its global annual turnover — the maximum penalty available. This comes as a result of the company closing the acquisition of Grail without European Union antitrust approval.
Plans to appeal
Illumina said that, following the ALJ’s decision favoring the company, it presents a “strong case on appeal.” The company intends to move as quickly as possible. It aims to find a resolution in the U.S. Court of Appeals by late 2023 or early 2024. That should arrive around the same time as the decision in the European Court of Justice (ECJ).
Should Illumina fail to prevail in either appeal, it expects to “move expeditiously to divest Grail in a manner that serves the best interests of Illumina’s shareholders.”
“Winning both appeals would maximize value for shareholders,” the company said in the release. “It enables Illumina to expand the availability, affordability and profitability of the groundbreaking Galleri test in the $44-plus billion multi-cancer screening market. It also protects Illumina’s ability to optimize a future divesture should that be in the best interest of shareholders.