Home » US business news » EU orders Illumina to unwind Grail acquisition

EU orders Illumina to unwind Grail acquisition

By Nithya Bose in US business news, posted October 15, 2023

Illumina must reverse its $7.1 billion acquisition of cancer test developer Grail, the European Union's competition regulator ordered.

The watchdog cited concerns over stifling innovation and limiting consumer choice in the emerging market for early cancer-detection blood tests.

The European Commission, responsible for overseeing antitrust regulations within the EU, announced that Illumina would be required to present a concrete plan for divesting Grail.

This comes after the commission barred the acquisition last year due to its anticompetitive potential.

Despite ongoing antitrust concerns, Illumina, known for its gene-sequencing products, completed the Grail acquisition in 2021.

The European Commission now demands Illumina to return Grail to the same level of independence it had before the acquisition.

It ensures that Grail remains as competitive as before the deal was finalized.

If Illumina fails to comply with the divestment order, the commission possesses the authority to impose a fine of up to 10 percent of Illumina's annual worldwide revenue.

Illumina has said it is currently reviewing the commission's divestment order.

In contrast, Grail views the EU's decision as recognizing its role in cancer detection.

During the period when antitrust authorities were assessing the acquisition, Grail made substantial progress in developing its multi-cancer detection test.

The EU's decision to block the acquisition had significant repercussions for Illumina.

It led to the resignation of its former CEO, Francis deSouza, earlier this year.

It followed a contentious proxy battle with billionaire activist Carl Icahn, who had strongly criticized the transaction.

US antitrust regulators also opposed the deal.

In April, the Federal Trade Commission reversed the ruling of an administrative law judge, ordering Illumina to unwind the merger. Illumina has appealed this decision.

Illumina originally founded Grail and retained a minority stake when it spun off most of the business in 2017.

Illumina subsequently agreed in 2020 to acquire the remaining part of Grail.

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Upon completing the acquisition, Illumina claimed that no legal impediments were preventing it from doing so.

The firm said it would maintain Grail as a separate unit, adhering to competition authorities' decisions.

The European Commission had previously fined Illumina 432 million euros (around $459 million) for proceeding with the acquisition before receiving regulatory approval.

This fine constituted 10 percent of the company's annual worldwide revenue, representing the maximum allowable penalty.

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Illumina remains entangled in various legal battles related to the acquisition, including a challenge to the EU's jurisdiction to review the deal.

The company argues that the EU should not have been able to review the merger due to Grail's lack of revenue within the EU.

If Illumina prevails in its jurisdictional appeal, it claims there would no longer be grounds for fines or a divestment order.

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