Deals & investment

EU regulators order Illumina to sell Grail following ‘unlawful’ merger

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Illumina is awaiting directives from the European Commission (EC) regarding divestment of Grail, while asserting that the commission lacks authority over the merger.

A key player in the gene-sequencing industry, Illumina is currently contesting the jurisdictional matter with the European Court of Justice.

The company has affirmed that it will move towards divesting Grail in accordance with the commission’s instructions, while also continuing to pursue its legal appeal.

The commission, in a statement, said: “Illumina and GRAIL unlawfully completed the merger during the Commission’s in-depth investigation, in breach of EU merger control rules.”

This is the first time the EC has ordered for the unwinding of an already completed acquisition.

The recent order, issued on Thursday last week, mandates that Illumina must reinstate Grail’s autonomy to the same degree it held prior to the acquisition. In 2021, the EC had instituted measures that required Illumina to maintain a separation between itself and Grail.

The EC emphasised that “reestablishing Grail’s independence will eliminate the competitive disadvantages resulting from Illumina’s capacity and motivation to impede or disadvantage Grail’s competitors.”

Additionally, the EC stipulated that Grail must become “as viable and competitive after the divestment as it was before Illumina’s acquisition.

“This will ensure that the innovation race between Grail and its rivals can continue in conditions similar to those in place before the transaction.”

The commission has not disclosed a specific timeframe for Illumina to comply with the new order but has stressed that the divestment must be carried out “within strict deadlines.”

Additionally, the order specifies that failure to adhere to the prescribed measures could result in the imposition of periodic penalty payments of up to 5 per cent of Illumina’s average daily total revenues and a fine of up to 10 per cent of its annual worldwide revenues.

In July 2023, the commission had directed Illumina to pay a fine of 432 million euros for closing the Grail deal without prior approval.

Illumina’s acquisition of Grail triggered a proxy battle led by activist investor Carl Icahn, which led to the removal of Chair John Thompson in May. Subsequently, CEO Francis deSouza stepped down from his position a few weeks later.

Illumina is also contesting a divestment order from the Federal Trade Commission concerning Grail.

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