US antitrust regulator orders Illumina to unwind $8bn Grail deal
The Federal Trade Commission has ordered Illumina to divest cancer screening company Grail, arguing the $8bn acquisition would damage competition in the US market for life-saving cancer tests.
The decision reverses an earlier ruling by an administrative law judge in favour of the deal and marks the latest setback to the San Diego-based company’s efforts to diversify into the nascent market for multi-cancer early detection tests.
The US antitrust regulator issued an opinion and order on Monday, which found Illumina’s decision to buy Grail, a company that it had initially spun out in 2016, would diminish innovation in the domestic market for the oncology tests while increasing prices and decreasing choice and quality of tests. It rejected Illumina’s claim that the acquisition would accelerate the rollout of Grail’s oncology tests and save lives, noting the company’s projections were “vague, self-serving, and unsupported”.
“This is extremely concerning given the importance of swiftly developing effective and affordable tools to detect cancer early,” said the FTC in a statement.
Illumina said it intends to file a petition for review promptly with a US Court of Appeals and will seek expedited treatment of the appeal. The FTC’s order to unwind the acquisition will be automatically stayed pending appeal, said the company.
The ruling by the FTC follows a similar move by European regulators aimed at unpicking Illumina’s purchase of Grail. The world’s biggest gene sequencing company made a contentious decision to close its acquisition of Grail in August 2021 despite opposition from the European Commission and FTC.
The commission is expected to fine Illumina up to 10 per cent of its annual turnover and issue a final divestment order shortly.
Illumina’s battle with antitrust regulators has sparked a proxy battle with activist investor Carl Icahn, who claims the deal cost Illumina up to $50bn in market value.
On Monday, Icahn reiterated his criticism of Illumina’s decision to close the Grail deal and repeated his call for the removal of the chief executive, Francis deSouza.
“We believe it is unconscionable that the board of directors still entrusts Mr deSouza with running our potentially great company. During his tenure, not only has the company lost $50bn of shareholder value but many of his talented executives have left or are in the process of leaving,” said Icahn in a letter to shareholders.
In September, an administrative law judge sided with Illumina over the acquisition of Grail, which had argued the deal would not hurt competition. The FTC opinion and order on Monday override that ruling.