Regulators are planning to slap biotechnology company Illumina (NASDAQ:ILMN) with a record fine of $453 million for its 2021 purchase of Grail. Illumina completed the acquisition of Grail, a cancer detective test maker, without attaining the final consent of the European Union (EU) and U.S. regulators. The EU is said to impose the fine as early as next week, as a Financial Times report stated.
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The $453 million fine represents roughly 10% of Illumina’s annual turnover. If enforced, this would be the biggest fine to date set by the regulator, aiming to deter any future acquisitions without the EU’s consent. Illumina plans to challenge the imposed fine, citing concerns that regulators are hindering the process of developing a life-saving cancer detection test. Separately, the company is even challenging the EU’s jurisdiction to investigate the merger in a Luxembourg court.
Showing its discontent towards the EU’s decision, Illumina said, “We have appealed the EU’s jurisdiction and will appeal any decision imposing a fine. Illumina’s merger with Grail is pro-competitive and in the best interests of patients in Europe and worldwide.”
Illumina Faces Multiple Challenges
After a thorough investigation, the EU concluded in 2022 that Grail’s acquisition would thwart competition, ordering the gene sequencing equipment maker to divest Grail or face a penalty. Similarly, in April 2023, the U.S. Federal Trade Commission (FTC) ordered Illumina to unwind its $7 billion acquisition of Grail for antitrust concerns. Illumina is contesting the orders of both the FTC and the EU in court.
In addition to the ongoing dispute with regulators, Illumina is facing stiff investor activism led by billionaire investor Carl Icahn. The hedge fund manager is also fighting a proxy battle with the company for its reckless takeover of Grail. Icahn has won a series of rounds in the battle, including the ousting of Board Chair John Thompson, the stepping down of CEO Francis DeSouza, and the company’s latest decision to cut its workforce and maintain efficiency.
Is Illumina a Buy or a Sell?
On TipRanks, Illumina stock has a Moderate Buy consensus rating based on seven Buys, five Holds, and two Sell ratings. Also, the average Illumina price target of $245.38 implies 30.4% upside potential from current levels. Meanwhile, ILMN stock has lost 6.4% so far this year.
