USA — Illumina, a major player in genomics, has announced its decision to divest Grail, a cancer blood test developer it acquired for US$7.1 billion.

The move comes after more than three years of legal battles with authorities in the United States and Europe, culminating in an unfavorable federal appeals court decision.

Jacob Thaysen, Illumina’s CEO, expressed commitment to an expeditious divestiture, allowing Grail’s technology to continue benefiting patients. Thaysen stated, “I am confident in Illumina’s opportunities and our long-term success.”

Former Illumina executive, Alex Dickinson, applauded Thaysen’s decision, terming it “great news for the company” and acknowledging the challenges faced by the leadership.

Dickinson highlighted the potential complexity of the sales process, speculating on options such as an initial public offering (IPO) while pointing out the perceived challenges in Grail’s financial transparency, citing an ongoing SEC investigation.

The legal battles reached a turning point after the U.S. Fifth Circuit Court of Appeals sided with the U.S. Federal Trade Commission (FTC), concluding that the Grail acquisition would likely “substantially lessen competition,” violating antitrust laws.

While the court called for the FTC to reconsider the acquisition, it rejected Illumina’s arguments about the FTC’s leadership structure violating the U.S. Constitution.

In response, Illumina announced its decision to divest Grail, abandoning further appeals. The company had previously asserted there was no legal basis for divestiture, attempting to challenge regulators in the U.S. and Europe.

The divestiture plan aligns with Illumina’s commitment to dissolve or “unwind” its purchase of Grail, ensuring Grail’s independence, as mandated by the EC’s October divestiture order.

Illumina had initially announced its plan to acquire Grail in September 2020, intending to accelerate the commercialization of Galleri, a cancer blood test capable of detecting over 50 cancers.

Despite the disclosed deal value of US$8 billion, Illumina retained a stake in Grail, reducing its overall value to US$7.1 billion.

Grail has exhibited positive financial performance, generating US$63 million in revenue during the first nine months of this year, with notable year-over-year growth. However, the company reported operating losses that decreased from the previous year.

The divestment process, expected to be finalized by mid-2024, raises questions about potential buyers, the structure of the divestment, and the future trajectory of Grail’s innovative cancer blood testing technology.

The legal and regulatory challenges, including fines imposed by the EC, have significantly impacted Illumina’s strategic direction.

The European Commission (EC) had imposed a fine of approximately €432 million (US$471 million), constituting 10% of Illumina’s revenue, making it the largest fine ever imposed by the EC.

The decision to divest Grail is seen as a pivotal moment, acknowledging the shifting landscape of antitrust enforcement and competition in the modern healthcare economy.

Illumina’s move also follows fierce opposition from activist investor Carl Icahn, who had launched a partially successful proxy campaign earlier in the year to alter Illumina’s board and strategic direction.

The divestiture decision follows a period of uncertainty and resource drain for Illumina, prompting a strategic shift under new leadership.

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