Aug 20, 2021 - Economy

Illumina CEO on closing a merger the FTC sued to block

Illumina CEO Francis deSouza

Illumina CEO Francis deSouza. PPhoto by Kevin Dietsch/Getty Images.

Illumina CEO Francis deSouza tells Axios that his company is not trying to defy U.S. or European regulators by completing its $7.1 billion purchase of cancer testing company Grail, despite doing so amidst ongoing government reviews.

Why it matters: Illumina argues that the merger could make early cancer detection more affordable and widely available, but there are concerns that it could be anticompetitive.

Backstory: Grail was developed inside of Illumina, but spun out in 2017 and raised around $2 billion in outside capital. The two parties agreed to merge last September, to combine the maker of blood tests that can detect multiple cancers with the maker of gene sequencers upon which such tests were developed.

  • The FTC in March sued to block the deal, but dropped an earlier injunction request because it (wrongly) believed an ongoing European regulatory review would prevent the merger from closing.
  • Illumina closed the deal this week, saying it would keep Grail as a stand-alone company until regulatory issues are resolved. DeSouza says that even if legal challenges go on for years, he's prepared to wait rather than divest.

Why close now? DeSouza argues that his company's hand was forced by recent news that the Europeans are unlikely to reach its conclusions until sometime in the first quarter of 2022.

  • The closing date requirement was already extended from Sept. 20 to Dec. 20, as allowed in the agreement, and the deal's HSR approval in the U.S. would need to be restarted were the closing delayed too far into March 2022.
  • If Illumina does ultimately lose in either the U.S. or in Europe, it would either seek a buyer for Grail or take it public, deSouza says.
  • "We deeply believe by moving forward there are lots of lives to be saved, around 10,000 just in the U.S. in the 9-year period after the companies are combined," he adds.
  • "And, again, that's just the U.S. Grail only has plans to be in the U.S., Canada and the U.K., but we have products in over 140 countries and relationships with healthcare systems around the world."

Look ahead: An administrative trial on the FTC law suit kicks off next week.

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