Illumina’s stock price has been tipped to rise by financial analysts as it finally completes plans to spin off blood testing company Grail, after having been ordered by the European Commission to divest itself of the company.
On Monday (3 June), Illumina’s board of directors announced that it had approved plans to see the US-based company spun out by the end of this month. At the same time, Illumina maintains a minority share of 14.5% in Grail, with current holders of the former’s stock being issued one share of Grail stock for every six shares of Illumina common stock.
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Following the announcement, Illumina’s stock dropped -1.84% to a value of $102 per share, down from the $104 before the announcement. Despite this financial analysts have pegged Illumina as a company set to outperform its current valuation as reported by Fintel. US financial analysts, Stephens & Co, labelled the stock as ‘overweight,’ stating it expects the stock to rise sharply to $153.34 (50.25%).
Illumina CEO Jacob Thaysen said: “As we prepare to lead the next era of genomics innovation, we believe GRAIL will play an important role in advancing the industry and improving human health. We will maintain a minority share of 14.5% in GRAIL and remain excited about GRAIL’s breakthroughs in the fight against cancer. We also look forward to exploring opportunities where we can support GRAIL’s work with industry-leading technologies and solutions.”
It follows a long series of battles between Illumina and the European Commission (EC) after the European regulator ordered the company to undo its acquisition of Grail in September 2022, over concerns that it would have stifled innovation and reduced choice in the emerging market for blood-based early cancer detection tests. The EC says that Illumina and GRAIL unlawfully completed the merger during the Commission’s investigation phase – a breach of EU merger control rules.
Now, Illumina’s board of directors is announcing a pro rata dividend of 85.5% of the outstanding common stock of GRAIL to Illumina’s shareholders. The announcement follows after Grail announced plans to ensure that its multi-cancer early detection test will be evaluated using under-represented populations as part of its REACH study, conducted among Medicare beneficiaries.
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