Regulators Tell Illumina to Unwind GRAIL Deal

Reflecting glass of Ilumina building

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Key Takeaways

  • The Federal Trade Commission (FTC) ruled that Ilumina (ILMN) must unwind its purchase of cancer test company GRAIL.
  • Shares of Ilumina fell 1% on April 3 in response to the FTC's decision, but the stock is still up 13% year to date.
  • Activist investor Carl Icahn recently started a proxy fight, claiming that Ilumina stock had declined because of the board's poor decisions related to the deal.

Illumina (ILMN) shares dropped as U.S. regulators ordered the DNA sequencing firm to unwind its purchase of cancer test developer GRAIL, which it purchased for $8 billion in September 2020. Illumina said it will appeal.

The Federal Trade Commission (FTC) ruled that the deal "would stifle competition and innovation in the U.S. market for life-saving cancer tests." The FTC said that this reverses an initial decision by an Administrative Law Judge who had dismissed antitrust claims against the purchase by FTC staff last year.

Illumina cited that previous ruling in arguing that it believes it has a strong case on appeal. The company indicated that it planned to move quickly and hopes to secure a victory in the U.S. Court of Appeals by the end of this year or early 2024. It added it is also looking for a win at that time in its appeal of a similar ruling against the acquisition by European regulators.

Icahn Proxy Fight

The decision by Illumina to close the GRAIL purchase prior to getting European regulatory approval is the basis for a proxy fight by activist investor Carl Icahn. Last month, Icahn sent an open letter to shareholders calling on them to vote for three board members he's backing, claiming that Illumina's board's actions involving GRAIL caused shares to plummet. Just last week, Illumina responded by blasting Icahn and recommended that investors not support his slate.

Shares of Illumina fell 1% on April 3, although they're 13% higher so far this year.

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Article Sources
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  1. Federal Trade Commission. "FTC Orders Illumina to Divest Cancer Detection Test Maker GRAIL to Protect Competition in Life-Saving Technology Market."

  2. Grail. "Illumina to Acquire GRAIL to Launch New Era of Cancer Detection."

  3. Illumina. "Illumina Will Appeal FTC Decision in Federal Court, Will Seek US Resolution by Late 2023 or Early 2024."

  4. Federal Trade Commission. "Docket No. 9401."

  5. Federal Trade Commission. "FTC Challenges Illumina’s Proposed Acquisition of Cancer Detection Test Maker Grail."

  6. Carl Icahn. "Open letter to Shareholders of Illumina, Inc."

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