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EU Orders Illumina to Reverse $7B Grail Buy-Out

 |  October 12, 2023

US genetic testing giant Illumina has been instructed by EU antitrust regulators to divest its cancer test subsidiary Grail, following its completion of the acquisition without securing prior approval, reported Reuters.

In a demonstration of the intensifying scrutiny surrounding pharma and biotech deals on both sides of the Atlantic, the European Union (EU) has handed Illumina a record antitrust fine of 432 million euros ($457 million) for the “gun-jumping” offense of finalizing the deal prematurely.

EU antitrust watchdogs have significantly escalated their examination of pharmaceutical and biotech transactions in recent years due to concerns about potential stifling of innovation and reduced competition within the sector.

The European Commission, in its decision to impose the substantial fine, raised concerns that Illumina’s ownership of Grail could lead to a suppression of competition in the development of blood-based early cancer detection tests. This culminated in the EU competition enforcer blocking the $7.1 billion deal in 2022.

Read more: FTC Orders Illumina To Divest GRAIL To Protect Competition

In a statement, the European Commission declared, “With today’s decision, the Commission has adopted restorative measures requiring Illumina to divest Grail and restore the situation prevailing before the completion of the acquisition.” The EU regulator has directed Illumina to ensure that Grail returns to a state of independence equal to what it was before the acquisition, ensuring it remains competitive.

Illumina has the flexibility to choose the means by which it divests Grail, whether through a trade sale, a capital markets transaction, or other methods. However, the divestment must be executed within strict deadlines.

The company, meanwhile, has not taken the situation lightly and has filed a lawsuit against the EU watchdog. Their grievances include the blocking of the deal, examination of the case despite not meeting EU merger criteria, an order to keep Grail separate, and the “gun-jumping” decision, highlighting the contentious nature of the situation.

Source: Reuters