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Illumina Faces Loss of Grail, Massive Fines

by | Aug 2, 2022 | News, Open Content

European Commission accuses sequencing giant of “jumping the gun” on Grail acquisition.

Last August, facing a contractually required $300 million termination fee, Illumina rolled the dice and completed its $8 billion acquisition of former liquid biopsy spinoff Grail for $8 billion without securing regulatory approval from the European Commission (EC). There are troubling new signs that Illumina’s gamble is going to come back snake eyes.

Last month, the European General Court affirmed the EC’s jurisdiction to review the deal under European Union merger and acquisition (M&A) laws. On July 19, the EC sent Illumina and Grail a Statement of Objections for violating the “standstill obligation” requiring companies not to proceed with proposed M&A transactions until they receive the required regulatory approval, a violation that carries a potential fine of up to 10 percent of a company’s annual revenues. Illumina is expected to top $5 billion in revenues this year.

Like the US Federal Trade Commission (FTC), the EC has serious concerns that acquiring Grail and its Galleri multi-cancer early detection test will give the sequencing giant control over the majority of the international market share of sequencing machines, along with the power to stifle DNA oncology research by competitors. All of this is despite Illumina’s pledge to sign new standard contracts guaranteeing customers who are developing cancer diagnostics access to hardware with no price increases for at least 12 years.

The EC is expected to make a ruling on the standstill violation in September. Investigation into the legality of the underlying Grail acquisition could continue into next year. For now, all Illumina can really do is continue to hold Grail at arm’s length and hope for the best.

Get more insight on the acquisition, as well as our full M&A report for July 2022, in the August 2022 issue of Lab Industry Report.