The U.S. Securities and Exchange Commission (SEC) is investigating Illumina’s $7.1 billion acquisition of Grail, a cancer test developer, according to a securities filing by Illumina. The SEC probe follows the European Commission’s record $476 million fine on Illumina for completing the acquisition without obtaining regulatory approval. The SEC has requested documents, communications, and information related to the deal, including conduct and compensation details of certain members of both Illumina and Grail’s management.
Illumina stated in the filing that it is cooperating with the SEC’s investigation. Following this news, Illumina’s shares fell approximately 4% on Friday.
Illumina’s acquisition of Grail has attracted significant scrutiny from antitrust regulators, both in the U.S. and the European Union (EU). The European Commission blocked the deal in September 2021 due to concerns about its potential impact on innovation and consumer choice in the cancer detection test market. Illumina appealed this decision, arguing that the European Commission lacks jurisdiction over the merger of two U.S. companies.
The company expects a final decision on its appeal in late 2023 or early 2024. At the same time, it anticipates the outcome of its appeal against a similar order by the U.S. Federal Trade Commission (FTC). Illumina has indicated that it will divest Grail if it loses either appeal.
Illumina’s determination to retain Grail triggered a proxy fight with activist investor Carl Icahn, who holds a 1.4% stake in the company. Icahn’s opposition primarily stemmed from Illumina’s decision to finalize the acquisition without securing approval from antitrust regulators. Despite these challenges, Illumina aims to enhance the availability and affordability of Grail’s Galleri test, which can screen for over 50 types of cancers through a single blood draw.
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