Illumina (NSDQ:ILMN) announced that it completed its long-awaited and much-scrutinized acquisition of cancer detection company Grail.
Illumina, however, also said in a news release that it will hold Grail as a separate company as the European Commission conducts an ongoing regulatory review. A decision from the EU regulators is projected after the deal expires, but Illumina said Grail has no business in Europe. Company officials believe the review is out of the European Commission’s jurisdiction.
In September 2020, San Diego-based Illumina announced that it agreed to acquire Grail, a startup that spun out from Illumina nearly five years ago, for cash and stock consideration of $8 billion.
The announcement of the proposed merger was met with heavy scrutiny, with Illumina and Grail agreeing this past spring to postpone the planned purchase until after Sept. 20 while the FTC challenged the deal. The company in March stated that it disagreed with and will oppose the FTC’s challenge to the acquisition. A U.S. judge ruled in favor of an FTC petition to drop its case against the merger without prejudice — a move that allowed the EU to continue investigating the merger.
Illumina will present a jurisdictional challenge in the General Court of the European Union later this year. The company said that, while it holds Grail separate while proceedings are ongoing, it can abide by whatever final decision is reached.
“The decision to make the acquisition and hold the companies separate permits the regulatory processes to proceed while safeguarding the life-saving, pro-competitive benefits of this vertical transaction without the deal expiring. We will abide by any outcome ultimately reached by the courts,” Illumina general counsel Charles Dadswell said in the release.
Grail was founded in 2016 and spun out as a standalone company powered by Illumina’s NGS technology for developing data science and machine learning for enabling multiple cancers in early detection tests. It raised approximately $2 billion to support its platform and develop the Galleri multi-cancer screening test.
“Just as we are now able to screen for early-stage diabetes and high cholesterol, we will soon be able to conduct multi-cancer early detection with a simple blood test in your doctor’s office,” Illumina CEO Francis deSouza said. “Since early detection of cancer saves lives, this new genomic test will be nothing short of transformational for human health and the economics of healthcare.”
Grail stockholders are entitled to a cash consideration of approximately $3.5 billion through the merger, or, excluding Illumina, approximately $3.1 billion. In addition, approximately $400 million in cash will be spent by Illumina to cover the tax withholding requirements from net settling shares of Illumina common stock issuable to Grail employees.
“The merger with Illumina will get the Galleri test to people far faster. We aim to accelerate this process so the test will be available in doctors’ offices everywhere, fully reimbursed,” Grail CEO Hans Bishop said. “A one-year acceleration of access to the Galleri test for the US population has the potential to save 10,000 lives over a 9-year period.”
