A constructing on the campus on the world headquarters of Illumina is shown in San Diego, California, Sept. 1, 2021.
Mike Blake | Reuters
The U.S. Securities and Exchange Commission is investigating Illumina over its controversial $7.1 billion acquisition of cancer test developer Grail, the DNA sequencing company said in a securities filing late Thursday.
Last month, the SEC informed Illumina in regards to the probe and requested documents and communications related to the deal. The agency also asked for statements and disclosures in regards to the “conduct and compensation” of certain members of each Illumina and Grail’s management, based on the filing.
Illumina, within the filing, said it’s cooperating with the SEC. An agency spokesperson didn’t immediately reply to CNBC’s request for comment on the investigation.
Shares of Illumina fell about 4% Friday.
The SEC’s probe only puts more pressure on Illumina, which has lost great sums of cash since closing the deal in August 2021. The corporate’s market value has fallen to roughly $28 billion from about $75 billion the month the deal closed.
Illumina’s Grail deal has also faced heavy scrutiny from antitrust regulators within the U.S. and European Union.
The European Commission, the EU’s executive body, fined Illumina a record $476 million last month for closing the acquisition without first securing regulatory approval.
The high-quality got here after the commission blocked the deal in September over concerns it will stifle innovation and consumer selection within the emerging marketplace for cancer detection tests.
Illumina has appealed the European Commission’s decision, arguing that the body lacks jurisdiction to dam the merger between the 2 U.S. firms.
Illumina expects a final decision on an appeal in late 2023 or early 2024. That is also when the corporate anticipates it is going to hear an end result of its appeal of an identical order by the U.S. Federal Trade Commission.
Illumina has said it is going to divest Grail if it loses either appeal.
Illumina’s determination to maintain Grail sparked a heated proxy showdown with activist investor Carl Icahn, who holds a 1.4% stake in the corporate. Much of Icahn’s opposition stemmed from Illumina’s decision to shut the acquisition without gaining approval from antitrust regulators.
Illumina believes it may well expand the supply, affordability and profitability of Grail’s Galleri test, which might screen for greater than 50 forms of cancers through a single blood draw.