Illumina-GRAIL deal “may ultimately be blocked” despite FTC win – Canaccord
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After Illumina (NASDAQ:ILMN) handed a defeat to The Federal Trade Commission in a case filed to block its acquisition of cancer test developer GRAIL, Canaccord Genuity argues that the deal, which is under regulatory scrutiny in Europe, is likely to fail.
Canaccord's latest view on the $7.1B deal comes after Wall Street Journal reported Thursday that an administrative law judge ruled in favor of the company rejecting FTC's position that the acquisition of GRAIL would hurt competition in the market for multicancer early detection tests.
"Indeed, the defeat of the FTC challenge is positive for the GRAIL merger and provides some hope for the completion of the acquisition," Canaccord wrote, pointing to ongoing regulatory challenges the company faces in the EU to complete the deal.
The firm wrote that the experts in merger law and regulation it contacted were less optimistic about the ILMN's position in Europe, where the European Commission is expected to issue its decision on the antitrust case by Sep. 12.
"However, it appears the merger may ultimately be blocked," Canaccord concluded, reiterating the Buy rating and the $380 per share target on the stock due to new product updates expected from the company at upcoming investor and customer events.
Wall Street has remained bullish on Illumina (ILMN) stock, with an average rating of Buy from analysts. However, Seeking Alpha's quant system, which consistently beats the market, rated ILMN as a Sell.