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SEC Launches Investigation into $7.1B Grail Acquisition by Illumina

 |  August 13, 2023

On Tuesday, the U.S. Securities and Exchange Commission (SEC) announced an investigation into a controversial $7.1 billion acquisition of cancer test developer Grail by DNA sequencing company Illumina.

In a regulatory filing, Illumina stated that the SEC had requested documents and communications related to the merger, as well as statements and disclosures regarding the “conduct and compensation” of the management of both companies.

Illumina noted that it was cooperating with the SEC, but an agency spokesperson did not comment on the investigation.

The scandal-ridden takeover has also come under scrutiny from antitrust regulators in the US and the European Union. Last month, the European Commission fined Illumina a record $476 million for closing the acquisition without first obtaining approval. Illumina, however, appealed the decision, arguing that the body lacked jurisdiction to block the merger between the two US companies.

Related: FTC Orders Illumina To Divest GRAIL To Protect Competition

Illumina expects a final decision on an appeal in late 2023 or early 2024 and the same timeline applies to an appeal filed with the U.S. Federal Trade Commission. Illumina has vowed to divest Grail if it loses either appeal.

The determination to keep Grail has sparked a proxy showdown with activist investor Carl Icahn who holds a 1.4% stake in Illumina. Much of Icahn’s opposition stems from Illumina’s decision to close the acquisition without gaining antitrust approval.

Illumina believes the acquisition will expand the availability, affordability, and profitability of Grail’s Galleris test which can screen for more than 50 types of cancer through a single blood draw.

The company’s bid to unify cancer screening has been met with both derision and optimism from industry leaders. The SEC’s investigation will no doubt serve as a test of the company’s commitment to cancer testing and to regulatory oversight.

Source: CNBC