EU competition regulators on Thursday ordered DNA sequencing company Illumina to sell cancer detection test maker Grail, a deal that was at the heart of a proxy battle with Carl Icahn earlier this year.
The European Commission said in a statement that Illumina must unwind the Grail acquisition and warned of hefty fines if it does not. Earlier this week, Illumina stated that it would divest Grail if it loses the final appeals in U.S. or European courts.
Commissioner Didier Reynders said on Thursday that the ”decision restores competition in the development of early cancer detection tests. These tests could represent a breakthrough in our fight against cancer. By ordering Illumina to restore GRAIL’s independence, we ensure a level playing field in this crucial market to the ultimate benefit of European consumers.”
In July, EU regulators imposed a record 432-million-euro ($476-million) fine on Illumina over its decision in August 2021 to close the $7.1-billion acquisition of Grail without regulatory approval.
Activist investor Icahn earlier this year waged a contest for board seats at Illumina over that move, deeming it one of the main drivers of a $50-billion plunge in Illumina’s share price in less than two years since the decision to close the Grail deal.
Icahn won one of three targeted board spots and unseated Illumina’s chair at the annual meeting in late May. Three weeks after the bruising fight ended, Illumina’s Francis deSouza stepped down as CEO after facing harsh criticism from Icahn.
Illumina “considered the potential profits it could obtain by jumping the gun, even if it were ultimately forced to divest Grail. It then intentionally decided to proceed and to close the deal while the commission was still investigating the transaction that was ultimately prohibited,” said the commission when announcing the fine – equivalent to 10% of Illumina’s revenue – three months ago.
Illumina’s share price was down 1.7% at $135.59 at 10:12 a.m. in New York on Thursday.