Illumina Aims to Divest Grail by Q2 2024 Amid Regulatory and Investor Concerns

Summary

  • Illumina, a San Diego based firm, plans to execute the divestiture of Grail via a third party sale or a capital market transaction by Q2 of 2024. Grail, which is valued at $7.1 billion under this deal, is looking to sell a liquid biopsy, a blood test that can identify different types of cancer.
  • Illumina’s acquisition of Grail has been subject to criticism from the FTC over concerns of monopolistic practices. The company has also faced resistance from Europe and its investors, which includes billionaire Icahn. Despite the legal challenges, a U.S. appeals court ruled in favor of this acquisition, stating that the FTC had applied a wrong legal standard.

Illumina’s Divestiture Announcement

San Diego-based Illumina (NASDAQ:) announced plans to carry out the divestiture of Grail, its previous subsidiary. The process will be conducted through a third-party sale or a capital markets transaction. The final terms are set to be decided by the second quarter of 2024, according to the company’s statement.

About Grail

The DNA sequencing firm, Grail, is valued at approximately $7.1 billion under Illumina’s acquisition deal. The medical diagnostics company aims to market a cutting-edge blood test known as a liquid biopsy that can detect a wide array of cancer types.

Court’s Decision and FTC’s Concerns

The announcement follows a judgement by the U.S. appeals court, which overruled the Federal Trade Commission’s (FTC) resistance towards Illumina’s procurement of Grail. It was ruled that the FTC had erroneously applied a legal standard. FTC had expressed concerns that Illumina, being the leading provider of tumor and cancer cell DNA sequencing, might increase prices or decline to supply Grail’s competitors.

Illumina’s EU Stance and Investor Pressure

Concerns were also raised by Europe, proposing measures for Illumina to rollback its Grail acquisition. Illumina countered that it conducts no business within Europe and hence, the EU competition enforcer has no jurisdiction. Additionally, investors, led by billionaire Icahn, pressurized Illumina’s Grail deal. Icahn accused Illumina of overlooking their fiduciary duties in the agreement.

This deal, in tandem with the controversies surrounding it, could affect the foreign exchange market and stock trading, particularly of assets associated with Illumina and Grail.

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