Illumina, the leading maker of gene sequencing machines, said Sunday it would sell Grail, a cancer test developer it bought for $7.1 billion in 2021.
The move came two days after Illumina lost its case in a federal appeals court that largely upheld a Federal Trade Commission decision that Illumina should terminate its contract with Grail on antitrust grounds.
The case was seen by antitrust experts as a test of regulators’ efforts to stop big companies from buying young innovators.
The deal also hit a roadblock in Europe. In September 2022, the European Union said it would block the takeover. San Diego-based Illumina previously publicly said it would sell the startup if appeals in either jurisdiction were unsuccessful.
“We are committed to an expeditious divestiture of Grail so that the technology continues to benefit patients,” Illumina CEO Jacob Thaysen said in a statement. “The management team and I remain focused on our core business and supporting our customers. I am confident in Illumina’s opportunities and our long-term success.”
Grail, which has developed technologies for early detection of some types of cancer, began as a research project within Illumina. It was spun off as an independent company in 2016. Although it doesn’t compete with Illumina in gene sequencing, it does use gene sequencing in its blood tests for cancer.
Illumina continued to buy Grail despite an early complaint from the FTC, which argued that the acquisition would weaken innovation in the U.S. market and increase prices. Still, Illumina was confident it would win in court.
The sale of Grail will occur via a third-party sale or capital markets transaction, the company said, with the aim of closing the deal by the end of the second quarter next year.
Now that the Commission’s challenge to the deal has been upheld in court, other tech giants and dominant companies in their respective fields could block their takeover attempts by the agency. Since taking office in 2021, FTC Chairwoman Lina Khan has taken a more aggressive stance on mergers, which she says could be damaging to the economy.