Illumina Abandons the Fight with Regulators and Will Sell Grail

News Summary

Illumina has decided to terminate its controversial acquisition of Grail and will divest the cancer diagnostics test maker. The deal faced opposition from regulatory bodies in the United States and Europe when the DNA sequencing company closed the deal before obtaining approval. Activist investor Carl Icahn also criticized the decision and launched a proxy campaign at Illumina that helped him secure a seat on the board.

Overview of the News

It seems that the long saga surrounding Illumina’s acquisition of Grail for cancer diagnostics testing has come to an end. The company announced on Sunday that it would divest Grail after significant opposition from regulators and activist investor Carl Icahn. Illumina spun off Grail in 2016 and then reacquired it in September 2020. The deal, valued at $8 billion, was closed in August 2021 before regulatory approval was obtained. Authorities in the United States and Europe opposed the move, believing that the combination of the two companies would stifle innovation and raise prices.

Legal Battles and Activist Investor

As legal battles continue, Icahn criticized the company’s decision to proceed without securing approval and launched a proxy campaign, successfully obtaining a seat on the board and ousting chairman John Thompson. On Friday, a federal appeals court ordered the Federal Trade Commission to conduct a new review of the merger but highlighted that the FTC had substantial evidence to block the agreement.

Company Decision and Impact on Stocks

The company announced in a statement that it would not seek further legal appeals and would divest Grail through a third-party sale or capital deal. CEO Jacob Thysse stated that Illumina would expedite the process and that he and the management team are “still focused on our core business and supporting our customers.” Illumina’s shares rose by more than 2% around midday on Monday, but they have lost over a third of their value so far this year.

Source: https://www.investopedia.com/illumina-gives-up-the-fight-will-divest-grail-8417324