In an unusual move, the Federal Trade Commission announced that they have filed suit to block genetic sequencing leader Illumina’s (ILMN) $7.1B merger with the liquid biopsy company Grail.
Interestingly, Grail was founded as a subsidiary of ILMN and was spun off. After filing to go public, Grail announced that they had entered into an agreement for ILMN to buy the rest of the company.
It is the FTC’s position that ILMN may stifle competition in the emerging liquid biopsy market. Because ILMN holds a monopoly on short read sequencing, their competitors in the liquid biopsy space have no choice but to use ILMN’s products. Thus, the FTC believes the acquisition of Grail is anti-competitive.
Interestingly, ILMN used to be one of the largest holdings in the ARKK and ARKG ETFs. Cathie Wood chose to divest after ILMN announced the acquisition of Grail because she believed it would put ILMN in direct competition with their competitors.
This is the second time in 40 years that the FTC has blocked a vertical integration. They sued AT&T to block the integration with Time Warner Cable, which ultimately failed.
Interestingly, this is the second time in two years the FTC has sued to block ILMN’s acquisitions. They previously sued ILMN to block their merger with PACB. Ultimately ILMN and PACB terminated the merger.
Exact Sciences recently completed a horizontal integration to acquire the liquid biopsy company Thrive, which was not challenged.
Personally I believe this will take some time to wash out and I expect a bigger correction in ILMN stock. I believe this represents an opportunity for entries into a long position in ILMN. I have a hard time believing this merger won’t go through.
Long $ILMN.
Submitted March 30, 2021 at 11:18PM by Social_History https://ift.tt/3cEbndH
