NEW YORK – Illumina said on Sunday that it plans to divest Grail by June 2024 in either a third-party sale or a capital markets transaction.
The announcement comes after the US Court of Appeals for the Fifth Circuit issued a decision on Friday that sidestepped Illumina's grandest arguments about why the US Federal Trade Commission erred in April when it ordered Illumina to sell off the multi-cancer early detection test company it bought in 2021 for approximately $8 billion.
Illumina had suggested that the FTC's actions were unconstitutional on multiple levels. However, a three-judge panel from the appellate court said that "these constitutional challenges to the FTC's authority are foreclosed by binding Supreme Court precedent." Moreover, the decision, penned by Judge Edith Clement, said that the FTC "carried its initial burden of showing that the Illumina-Grail merger is likely to substantially lessen competition in that market […] and Illumina had not identified cognizable efficiencies to rebut the anticompetitive effects of the merger."
The court did, however, rule that the FTC had erred in its procedure and vacated the order and sent the case back to the agency for reconsideration.
Still, Illumina said in a statement that after reviewing the order, it "has elected not to pursue further appeals of the Fifth Circuit's decision."
"We are committed to an expeditious divestiture of Grail in a manner that allows its technology to continue benefiting patients," Illumina CEO Jacob Thaysen said in a statement. "The management team and I continue to focus on our core business and supporting our customers. I am confident in Illumina's opportunities and our long-term success."
The announcement signals the beginning of the end of a yearslong saga in which Illumina has run afoul of regulators on both sides of the Atlantic and experienced a shake-up at the highest levels of the company.
Illumina announced in 2020 its intentions to acquire the entirety of Grail, a company it spun off in 2016. The FTC and its European counterparts both investigated the deal's allegedly anticompetitive effects, but despite that regulatory scrutiny, Illumina forged ahead and closed the acquisition in August 2021.
Later that month, the FTC's administrative law trial began, with the agency making the case that Illumina could — and would — disadvantage other early cancer detection test makers, who relied on sequencing technology that only Illumina could provide. While the administrative law judge overseeing the case rejected the FTC's arguments in September 2022, the commission overturned that finding and ordered Illumina to unwind the deal.
Separately, Illumina received hundreds of millions of dollars in fines from European regulators for gun-jumping and in October received a second order to divest Grail.
In Monday morning trading on the Nasdaq, shares of Illumina are flat at $127.62 following a brief spike in price. Over the last five days of trading, shares of Illumina are up about 10 percent.