By Sam Boughedda
The General Court of the European Union ruled Wednesday that the European Commission can proceed with its review of the Illumina (NASDAQ:ILMN) acquisition of Grail.
Illumina lost its challenge in Europe's second-highest court, giving the EU the ability to scrutinize the $8 billion cash-and-stock takeover of U.S. life sciences firm Grail.
Stifel released a note following the news, with analyst Daniel Arias stating that after Illumina said it would appeal the decision to Europe's highest court, the Court of Justice, and EU antitrust attorney they spoke to last summer doesn't expect the Court of Justice to go against the General Court's ruling in this scenario.
"Overall, the process could be lengthy however, though the European Commission halted its probe in February while it awaited the General Court's ruling, it could come to its decision to approve/block the deal before the appeal plays out," said Arias. "The previously mentioned KOL believes the appeal process could take years, and ultimately it’s not very favorable to Illumina: to his knowledge, if the European Commission were to prohibit the deal, Illumina can appeal to the General Court, and though this would be a separately handled case, the ruling today was clearly in favor of the review taking place."
The analyst added that the General Court does not decide to approve or block the case (as a US court would in an FTC lawsuit, per the KOL). But, if Illumina were to win, it would send the case back to the Commission to assess it again, based on the market conditions at the time of the new assessment.
"An appeal to the General Court can take at least a year if not two - so the merger could see better odds if a more competitive market were to materialize - which is a possibility at this point with BGI entering Europe soon, Element having launched, and Ultima near doing so.
Illumina shares fell 3.6% during Wednesday's session.