Illumina Completes Grail Buyout Despite Uncertainty In Regulatory Process

In defiance of FTC and EU scrutiny, Illumina Inc ILMN went ahead to complete its $8 billion acquisition of Grail.
The finalization of the buyout comes as the FTC sued to block the move in March and the European Commission continues its ongoing regulatory review.
While there is no legal impediment preventing the deal from closing in the US, Illumina said the company would hold Grail as a separate entity during the EU audit to prevent European regulators from killing the deal.
Related: EU Regulators Temporarily Pause Illumina, Grail Deal Investigation
"The decision to make the acquisition and hold the companies separate permits the regulatory processes to proceed while safeguarding the life-saving, pro-competitive benefits of this vertical transaction without the deal expiring," Illumina general counsel Charles Dadswell said in a statement. "We will abide by any outcome ultimately reached by the courts."
Meanwhile, in the US, a trial in the FTC's administrative court is expected to begin next week, per the Wall Street Journal.
Also See: Core sequencing business boosted Illumina's Q2 Earnings
Analyst Reaction: SVB Leerink downgraded Illumina to Market Perform from Outperform with a price target of $425, down from $510.
Analyst Puneet Souda sees significantly tougher comparisons emerging in 2022 without any new major product cycle or further pricing reductions.
Adding to that is rising uncertainty with Illumina's action to close the GRAIL acquisition, now locking in a significant dilution in 2022 despite a clear line of sight of true integration and an uncertain regulatory process that holds the potential to drag into 2025.
Price Action: ILMN shares are down 8.77% at $465.90 during the market session on the last check Thursday.

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