The Federal Trade Commission ordered Monday that biotech firm Illumina must unwind its $7 billion purchase of the cancer-testing startup Grail. ILMN stock fell on the news.
The FTC order arrives amid activist investor Carl Icahn's battle with the biotech's management. Icahn has been pushing Illumina to unwind the controversial deal.
Illumina, a leader in gene sequencing, said it would appeal the commission's order in federal court. ILMN stock dipped 1.1% to close at 230.02 on the stock market today.
San Diego-based Illumina formed Grail in 2016 for early cancer detection and later spun off the unit.
ILMN Stock: Europe Opposed Grail Deal
Illumina's Grail acquisition closed in August 2021. The $7 billion takeover of Grail took place despite opposition from European regulators. They had concerns that Illumina could discriminate against Grail's rivals.
European regulators previously ordered a divestiture, which Illumina is appealing.
Meanwhile, the FTC staff found that Illumina would be able to unfairly help Grail stay ahead of cancer-test rivals.
Grail's blood tests aim to detect early signs of undiscovered cancers. The Grail deal provoked complaints from clinical labs like Guardant Health and Exact Sciences that are aiming to develop competing cancer screens using Illumina sequencers.
Last year, an FTC in-house judge sided with Illumina and found no antitrust violation. Monday's vote by the FTC overrules the judge, however.
Icahn Readies Proxy Fight
Since buying Grail, Illumina stock has dwindled. Shares peaked in February and August 2021, and have since dropped off.
Icahn owns a 1.4% stake in ILMN stock.
Meanwhile, Icahn is setting up a proxy fight for control of Illumina. He plans to nominate three people to Illumina's board of directors.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
