Home 5 Lab Industry Advisor 5 Essential 5 M&A & Strategic Dealmaking: Illumina May Finally Be Ready to Unwind GRAIL Acquisition

M&A & Strategic Dealmaking: Illumina May Finally Be Ready to Unwind GRAIL Acquisition

by | Jul 4, 2023 | Essential, Industry Buzz-lir, Laboratory Industry Report

After an eventful month in the Illumina-GRAIL saga, the story may soon be over.

For almost two years, Illumina’s attempted acquisition of GRAIL for $8 billion has been one of the most significant M&A stories in the diagnostics space. After an eventful month, it appears that the story may soon be over. Here’s a briefing on the recent developments and what they may portend for Illumina’s ownership of GRAIL:1

Illumina Shareholders Deliver a Mixed Verdict

Most in the industry seem to believe that Illumina overreached by acquiring its former spinout, GRAIL, in August 2021 without regulatory approval from either side of the Atlantic.1 The only ones who appear to disagree are Illumina’s directors, who remain determined to follow through on the company’s long-shot legal appeal against the antitrust rulings by the US Federal Trade Commission (FTC)2 and European Commission (EC).3

On May 25,4 Illumina’s shareholders had their say in the form of a proxy vote5 forced by activist investor Carl Icahn in a bid to replace the company’s three leading board members and end the quest for GRAIL.6 The results were mixed; shareholders replaced current board chairman John Thompson with Icahn Capital L.P. portfolio manager Andrew Teno, but re-elected two key directors targeted for removal by Icahn, including CEO Francis deSouza, the leading driver of the GRAIL deal. Icahn secured a victory, though, when shareholders voted down the company’s proposed executive compensation package.7

Far from settling the matter, the shareholder elections only deepened the divide within Illumina, causing company shares to fall 10 percent that same day.8 In an apparent move to weaken Teno’s influence, the board expanded its numbers from nine to 11 by adding two new “independent” members.9

The Proxy War Aftermath

For a while, it looked like the bid to get Illumina to unwind the GRAIL acquisition had failed, leaving a divided shareholder base and board of directors. On June 5, the San Diego-based sequencing giant went on the offensive by filing a petitioner’s brief in the US Fifth Circuit Court of Appeals to challenge the FTC’s constitutional authority to head off the GRAIL deal. “FTC’s actions have brought longstanding constitutional defects in the agency’s structure and proceedings into sharp focus” and “violated fundamental constitutional protections,” the brief argues.10

“Sometimes the price of an unconstitutional agency can be measured in lost dollars,” it continues. “This time, the price is lost lives. This Court should reverse the Commission’s decision and render judgment for Illumina and GRAIL, clearing the way for them to continue their life-saving work together.”

Epigenomics Is on the Block

A key molecular diagnostics company is apparently on the market. On June 12, Epigenomics, the German company known for its Epi proColon and Epi proColon “NextGen” tests, revealed that it’s deep into negotiations on a deal that would sell all its assets to an unnamed US-based strategic investor. Should the deal succeed, the buyer would pay just over $11.5 million to acquire all patents and intellectual property rights associated with the Epi proColon tests. In addition to $1.5 million in cash up front at closing, Epigenomics would receive milestone payments based on Epi proColon and Epi proColon “NextGen” sales, as well as shares of the acquiring firm. If Epi proColon “NextGen” is successfully commercialized, Epigenomics would also receive royalties and earn-out payments.13 Epigenomics’ stock shares surged, nearly doubling, when word of the acquisition emerged.14

The deSouza Resignation

Less than a week later, the story took another twist when CEO deSouza, having survived a proxy challenge, announced that he was voluntarily resigning. In his farewell letter, which he posted to LinkedIn, deSouza reiterated his support for the Illumina-GRAIL merger, stating that his “belief in the potential of GRAIL’s potentially life-saving technology and the benefits of merging it with Illumina remains unshakeable.”11

The company formally accepted deSouza’s resignation and named senior vice president and general counsel Charles Dadswell interim CEO as it searches for a permanent replacement.12

What Does It All Mean?

After a month of mixed messages, deSouza’s departure may be a sign that Illumina is finally ready to unwind the GRAIL acquisition. Keeping GRAIL might have been a move designed to increase the price Illumina can command on the market for the company. However, Illumina is still at risk of significant fines in both the US and Europe for having defied regulatory authorities by proceeding with the deal despite clearly expressed concerns about its anti-competitive effects on the genetic cancer testing market.2,3


  1. https://www.g2intelligence.com/illumina-faces-losses-of-grail-massive-fines/
  2. https://www.ftc.gov/news-events/news/press-releases/2023/04/ftc-orders-illumina-divest-cancer-detection-test-maker-grail-protect-competition-life-saving
  3. https://ec.europa.eu/commission/presscorner/detail/es/ip_22_5364
  4. https://www.sec.gov/Archives/edgar/data/1110803/000095015723000577/ex99-1.htm
  5. https://www.sec.gov/Archives/edgar/data/1110803/000119312522105644/d246458ddef14a.htm
  6. https://www.g2intelligence.com/illumina-faces-proxy-battle-over-grail-acquisition/
  7. https://www.sandiegouniontribune.com/business/story/2023-06-01/vote-totals-released-in-illuminas-proxy-fight-with-activist-carl-icahn-with-ceo-getting-71-percent-suppor
  8. https://www.morningstar.com/stocks/illumina-shareholder-vote-ousts-chairman-adds-one-icahn-associate
  9. https://www.prnewswire.com/news-releases/illuminas-board-of-directors-elects-two-experienced-independent-directors-to-board-301841153.html
  10. Illumina v. FTC, 23-60167, US Court of Appeals for the Fifth Circuit, June 5, 2023
  11. https://www.linkedin.com/pulse/thank-you-francis-desouza
  12. https://www.illumina.com/company/news-center/press-releases/press-release-details.html?newsid=9e81a4ac-0559-4af2-a3fb-6604847d7b80
  13. https://www.epigenomics.com/epigenomics-ag-negotiations-on-the-acquisitions-of-almost-all-assets/
  14. https://www.marketscreener.com/quote/stock/EPIGENOMICS-AG-18044986/news/Epigenomics-Shares-Surge-on-Talks-to-Sell-Nearly-All-Assets-for-11-5m-44099262/


Here’s a summary of the key M&A diagnostic deals that were announced or closed in late May through June 2023:

Mergers, Acquisitions, and Asset Sales

Acquiring Company Target(s) Deal Summary
Avacta Group plc Coris Bioconcept SRL ·       UK oncology diagnostics firm acquires Belgium-based manufacturer of lateral flow tests and other rapid diagnostic test kits
·       Price: Up to £10.4 million (roughly $13.34 million), including £7.4 million cash upfront and up to £3.0 million in future conditional milestone payments
·       Status: Closed
Biosynex ProciseDx ·       French diagnostics company acquires San Diego-based developer of point-of-care immunoassay platform that uses time-resolved fluorescence resonance energy transfer (TR-FRET) for therapeutic drug monitoring
·       Price: Undisclosed
·       Status: Closed
Eurobio Scientific Diagnostic International Distribution ·       Acquisition of Italian distributor of microbiology reagents and instruments part of Eurobio’s strategy to become a major player in European diagnostics market
·       Price: Undisclosed
·       Status: Expected to close by the end of July
INEX Innovate Yourgene Health ·       Acquisition of UK firm Yourgene’s Taiwan-based genomics business increases INEX’s capabilities in fetal health, oncology R&D, bioinformatics, biobanking, and clinical lab services
·       Price: Up to $4 million, including future milestone payments over next two years
·       Status: Expected to close in August or September
MedGenome Prognosis Laboratories ·       Acquisition of Indian diagnostics company enables MedGenome to expand its position in India market
·       Price: Undisclosed
·       Status: Closed

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