Illumina to Divest Grail if Challenge Fails in EU Court
Illumina Commits to Divesting Grail Within a Year
Illumina has announced its commitment to divest cancer test maker Grail within the next 12 months, as per the European Commission’s order. However, if the life sciences company successfully challenges the order in court, the divestiture may be eliminated. This move comes after Illumina completed the acquisition of Grail before obtaining approval from EU antitrust regulators.
Options for Illumina
Under the terms of the order, Illumina has the option to extend the divestiture timeframe by three months. Additionally, the company is allowed to explore various options, including a third-party sale or a capital markets transaction. If Illumina chooses a capital markets transaction, it would need to provide Grail with funding based on the cancer test maker’s long-range plan for two-and-a-half years.
Retaining a Stake and Royalty Arrangement
The order permits Illumina to retain up to a 14.5% stake in Grail. Furthermore, the company can reestablish the royalty arrangement it previously had with Grail. Illumina originally spun off Grail in 2016 but retained a 12% stake in the company.
Concerns Over the Deal
The European Union’s antitrust regulators have ordered Illumina to divest Grail due to concerns that the acquisition would give Illumina an incentive to prevent Grail’s competitors from accessing its technology for developing blood-based early cancer detection tests. The deal, worth $7.1 billion, faced opposition based on these concerns.
Pending Challenges
Illumina has challenged the European Court of Justice’s jurisdiction over the acquisition of Grail, arguing that it does not have authority in this matter. The challenge remains pending, and if Illumina is successful, the divestiture order would be eliminated. However, if the challenge fails or the U.S. Fifth Circuit Court of Appeals also rules against Illumina, the company will proceed with divesting Grail.
Continued Funding and Appeals
Illumina has appealed against the Federal Trade Commission’s order to divest Grail in the United States. The company is required to continue funding Grail until the divestiture is completed.
The future of Illumina’s ownership of Grail depends on the outcome of its legal challenges and its ability to meet the conditions set by the European Commission. As the process unfolds, the fate of Grail and its impact on the field of cancer detection will become clearer.
