Illumina, a prominent life sciences company, finds itself on the clock as it must divest Grail, a cancer test maker, within 12 months, according to a directive from the European Commission. This directive comes as a result of Illumina’s premature acquisition of Grail, pending the outcome of its legal battle.
The European Commission’s order stipulates that if Illumina fails to win its legal challenge in court, the divestiture must proceed. However, there is a provision that could extend the timeframe by an additional three months. Illumina is also granted the flexibility to explore various options, including third-party sales or capital market transactions, as reported by Reuters.
Should Illumina choose the path of a capital markets transaction, it would be required to fund Grail based on the cancer test maker’s long-term plan, providing two and a half years’ worth of financial support. Furthermore, the order allows Illumina to retain up to a 14.5% stake in Grail and reinstate the previous royalty arrangement.
The background to this situation lies in EU antitrust regulators’ decision to order Illumina to divest Grail after the $7.1 billion deal was completed without securing their approval. Concerns arose that Illumina might hinder Grail’s competitors from accessing its technology to develop blood-based early cancer detection tests.
Illumina has vehemently challenged the European Union’s jurisdiction over the acquisition of Grail, a dispute currently awaiting a resolution from the European Court of Justice (ECJ). Should Illumina succeed in this jurisdictional appeal or in a final decision from the U.S. Fifth Circuit Court of Appeals, the divestiture order will be revoked. However, if Illumina fails to secure victory in either of these legal battles, it will indeed divest Grail as mandated by the European Commission.