Illumina (Nasdaq:ILMN) announced that it plans to divest Grail after a drawn-out legal battle over the $7.1 billion acquisition.
In September 2020, Illumina announced an agreement to acquire Grail, a DNA sequencing and array-based tech developer. Grail itself was a startup that initially spun out from the company in 2016.
Illumina completed the acquisition in August 2021 but faced never-ending scrutiny in the two years that followed.
All events built up to a Dec. 15 decision from the U.S. Fifth Circuit Court of Appeals, upholding an order from the U.S. Federal Trade Commission (FTC) to unwind the acquisition.
In a Dec. 17 press release, Illumina said it has no intention to pursue further appeals of this decision. It previously stated that, if unsuccessful in its U.S. or European efforts to appeal decisions to unwind, it would agree to divest Grail. The European Commission ordered Illumina to divest Grail in October.
Illumina said it plans to execute the divestiture through a third-party sale or a capital markets transaction. It hopes to finalize terms by the end of the second quarter of 2024.
“We are committed to an expeditious divestiture of Grail in a manner that allows its technology to continue benefitting patients,” said Jacob Thaysen, CEO of Illumina. “The management team and I continue to focus on our core business and supporting our customers. I am confident in Illumina’s opportunities and our long-term success.”
The history behind the failed Illumina-Grail deal
Following the completion of the acquisition, Illumina had 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 at the time that the review was out of the European Commission’s jurisdiction.
In September 2022, the European Commission issued its ruling, ordering a stop to the planned acquisition. That decision came shortly after the FTC Chief Administrative Law Judge’s (ALJ) decision favored Illumina in a ruling. An administrative law judge in the U.S. rejected the FTC’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 the acquisition. In July, European authorities fined Illumina approximately $478.9 million (€432 million) and Grail $1,108 (€1,000). They claim the companies implemented their proposed merger before approval by the Commission. Such actions breach European Union merger control rules.
The fine of Grail represented a “symbolic” move as the Commission claims the company played an active role in the infringement. This marks the first time the Commission imposed a fine for gun-jumping on a target company, hence the small fine.
In August, the SEC kicked off an investigation into the deal as well. Then came the European Commission’s order to divest the deal, followed by the FTC’s.
All while this went on, Illumina underwent a major personnel change at the top. CEO Francis deSouza resigned in June, just over a week after Hologic CEO Stephen MacMillan became non-executive board chair. The company selected Thaysen, an executive at Agilent Technologies, to take over in September.
