Illumina prefers to spin off Grail into an independent business rather than sell the cancer diagnostics company, according to a financial document released Monday that describes the Illumina board’s deliberations over the decision.
The San Diego company, which acquired Grail for $8 billion in 2021 over the objections of antitrust authorities, said in the filing that its board considered various divestment options.
“The Illumina board concluded that the spin-off presented the most attractive alternative for enhancing long-term stockholder value while complying with the requirements of the [European Commission] divestment decision and that proceeding with the spin-off would be in the best interests of Illumina and its stockholders,” the company said in the document.
Illumina did not say how much the spinoff could generate or specify the timing for the deal. But the company has warned in recent financial statements that divestment may be on “materially worse” terms than its 2021 acquisition.
In the filing, and in a statement to Endpoints News, the company said it has not made a final decision and will keep its options open.
“This filing is a necessary step for a capital markets transaction; however, it is not an indication of the means by which Illumina will ultimately divest Grail,” Illumina said in a news release accompanying the filing.
The filing also reveals that Illumina asked prospective buyers last February to submit non-binding indications of interest. It’s unclear whether the company received any serious bids, or the status of any deal talks.
A pioneer in multi-cancer detection testing, Grail’s test isn’t covered by Medicare or insurers. The company has spent heavily on its first-of-its kind quest to win over regulators and payers, incurring a $1.5 billion net loss last year, according to the filing.
In a spinoff, Illumina would have to capitalize Grail with around $1 billion, according to the European Commission’s divestment order.
Illumina announced plans to divest Grail last December after a contentious proxy fight that resulted in new leadership.