Illumina Moves to Divest Grail

It’s over. After months of controversy and a long back and forth with Europe and U.S. regulators, Illumina has announced it will divest Grail, an early cancer detection firm.  

The divestiture comes after the U.S. Fifth Circuit Court of Appeals ruled that it agreed with FTC that there was evidence the acquisition was anti-competitive, according to a report from Reuters.

In a release, Illumina said the divestiture will be executed through a third-party sale or capital markets transaction. The company said the goal would be to finalize the terms by the end of 2Q24.

"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, in a release. "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."

How did we get here?

In September of 2020, Illumina announced it would acquire Grail, a company that it spun out, in 2016. The announcement came as Grail announced it was going public.

However, several months after the deal was made public FTC filed a lawsuit to block the acquisition. FTC’s complaint alleged the proposed acquisition will diminish innovation in the U.S. market for multi-cancer early detection tests.

Less than a month later, the EU followed suit – with the European Commission Directorate General questioning the proposed deal. The inquiries and scrutiny did not stop Illumina from closing the deal in August of 2021.

Illumina said since Grail does not conduct business in the EU, the company believes that the European Commission did not have jurisdiction to review the merger. 

The firm also said that it was committed to working through the ongoing FTC administrative process, and as always and would abide by whatever outcome is ultimately reached in the US courts.  

This strategy would turn out to be harmful for Illumina. The deal caused there to be a heated proxy battle launched in March of 2023 by Carl Ichan, an activist investor. Ichan sharply criticized the move to acquire Grail before regulatory agencies approved the deal.

Shareholders gave the boot to John Thompson, the company’s chair. However, Icahn failed for two other nominees to take board positions.

In June, Illumina’s longtime CEO, Francis deSouza stepped down. (Editor’s Note: Jacob Thaysen became Illumina’s CEO in September.)

Then in July, Illumina would go on to be fined $476 million for continuing with the deal in the EU. European Regulators eventually ordered Illumina to divest Grail in October.

Illumina has seen a nearly 37% decline in shares since the beginning of this year, according to a Reuters report.