Illumina has provided further details regarding the European Commission’s (EC) directive to reverse its acquisition of Grail, a company that developed a blood test for multiple cancer screenings. Illumina acquired Grail for $8 billion in 2021 without the EC’s approval. The key points from the disclosure are:
- Illumina has been given 12 months, with a possible three-month extension, to divest Grail.
- The company is required to fund Grail for two-and-a-half years based on Grail’s long-term projections if a spinoff is chosen.
- The EC mandates that Illumina maintain up to a 14.5% stake in Grail and reinstate the royalty agreement they previously had.
- The EC’s opposition to the merger is rooted in concerns that Illumina’s ownership of Grail could hinder competition in the liquid biopsy market, given Illumina’s dominant position in next-generation sequencing platforms.
- The EC had previously fined Illumina 432 million euros (approximately $454 million) for completing the Grail acquisition without its consent.
- Illumina has the flexibility to choose the structure of Grail’s divestiture, which could include selling to a third party or initiating a capital market transaction.
- The company has begun preparations for the divestiture while challenging the EC’s jurisdiction over the deal in a European court. If the appeal is unsuccessful, or if a final decision in the U.S. Fifth Circuit Court of Appeals mandates it, Illumina will divest Grail.