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EU watchdog fined on Wednesday lighting company a record 432 million euros ($476 million) in its acquisition of cancer test developer Grail without prior regulatory approval.
The European Commission fined 10 percent of San Diego-based Illumina’s global turnover, the maximum allowed under EU merger rules
This exceeds the committee’s previous Largest regulatory fine for mergers and acquisitions In 2018, telecommunications company Altice was levied a tax of $125 million, or 1% of its annual turnover.
An Illumina spokesman also said Wednesday that the DNA-sequencing company will appeal the fine. The spokesman said the commission’s decision, while expected, was “illegal, inappropriate and disproportionate”.
Illumina has set aside $453 million to pay penalties of up to 10% of 2022 revenue, according to a regulatory filing earlier this year. The deal has already cost Illumina a lot of money. The company’s market value has fallen from about $75 billion in August 2021, the month the company closed, to about $29 billion. get holy grail.But Illumina insists the deal will “Create maximum value for shareholders” and save lives.
The European Commission claimed in July last year that completing the Grail acquisition constituted a “serious breach” of EU merger rules and could result in “significant fines”.Two months later, the committee prohibited The deal fears it will stifle innovation and consumer choice in the nascent cancer testing market.
Illumina has appeal The decision by the European Commission concluded that the agency lacked jurisdiction to prevent the merger of two U.S. companies.
Illumina expects to make a final decision on the appeal in late 2023 or early 2024. At that time, the company expects a decision on the FTC’s appeal of a similar order.
Still, the company said it would spin off Grail if Grail’s appeal fails.
Margrethe Vestager, Executive Vice President of the European Commission adapted to the digital age, speaks to the media at the Berlaymont headquarters of the European Commission in Brussels, Belgium, September 6, 2022.
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Illumina believes it can expand the availability, affordability, and profitability of: Grail’s gallery testswhich can screen for more than 50 types of cancer with a single blood draw.
U.S. Republican lawmakers, a dozen state attorneys general and several advocacy groups also believe the merger could promote widespread adoption of life-saving technologies. These parties all sided with Illumina in its ongoing legal battle with the Federal Trade Commission (FTC) last month.
Illumina’s determination to keep Grail has sparked a bitter proxy showdown with activist investor Carl Icahn, who owns 1.4 percent of the company.
Icahn’s opposition largely stems from Illumina’s decision to complete the acquisition without approval from EU and U.S. antitrust regulators.
Illumina shareholders voted in May to remove former board chairman John Thompson and install one of Icahn’s nominees.
Weeks later, Chief Executive Francis deSouza abruptly resigned despite surviving a proxy vote.
Now, Illumina is searching for a new chief executive while implementing a cost-cutting program aimed at propping up the company’s shrinking operating profit.
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