2022-12-07| M&ASpecial

European Commission Continues Fight with Illumina and Orders Grail Acquisition Divestment

by Reed Slater
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After Illumina completed its acquisition of a cancer-detection company, Grail, in August last year, European regulators decided to prohibit the merger in September this year, citing concerns of Illumina stifling competition in the cancer-detection market. On Monday, the European Commission (EC) released a Statement of Objections outlining its demands to reverse the acquisition to return equilibrium to the biotech market. 

The Controversial Merger

Despite completing the acquisition in August last year, Illumina is saddled with lawsuits from regulatory bodies against the deal. The first came from the Federal Trade Commission (FTC) in March last year, months before the deal closed. After fighting back and forth in high courts, Illumina came out on top when an administrative law judge ruled in favor of the big pharma company. 

The FTC initially brought the lawsuit to light for the same concerns the EC has. The primary concerns revolve around Grail’s multicancer early detection (MCED) tests and Illumina’s potential ability to stifle competition in the field following the acquisition. 

Illumina holds a different view on the matter, though, saying the merger will get Grail’s proprietary MCED test, Galleri, to patients much faster and cheaper than Grail could on its own. The company estimated that accelerating access to Galleri could save approximately 10,000 lives over nine years. 

Still, the EC continues to pursue the merger under the EU Merger Regulation after opening an in-depth investigation into the matter in July last year. Over a year later, Illumina is still fighting back and does not seem to have plans to stop or reverse the acquisition.

Related Article: European Commission Prohibits Illumina’s Acquisition of GRAIL After The Company’s Win Against The FTC

The EC’s Demands to Unwind the Deal

Despite the EC’s review, Illumina went on with the merger, much to the ire of the regulatory body. With the September prohibition, the EC is demanding that Illumina unwind the acquisition to restore the EC’s initial prohibition decision.

The EC has three major measures it wants to see from Illumina to dissolve the transaction. First, Illumina must restore Grail’s independence from Illumina to its original state before the acquisition. Next, Grail must be as viable and competitive as it was before Illumina’s dealings with the company. Last, the EC ordered the divestment to be “swift and with sufficient certainty,” so the transaction is restored promptly.

It will take more than just the Statement of Objections for Illumina to start reversing the $7.1 billion deal. According to Reuters, the company said it believes divestment is not proportional to the allegations placed by the EC. Illumina also said the EC should hold off on any divestment orders until European courts settle its prohibition appeal. 

Illumina’s rocky Grail acquisition is sure to face more turbulence in the coming months and potentially years as regulatory bodies express concerns over the deal’s impact on competition in the cancer-detection test market. The EC’s most recent Statement of Objections is significant in the process, but Illumina is fighting back with all its might to bring Grail entirely under its wing. 

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