By Diagnostics World Staff
June 3, 2024 | Late today, Illumina announced that its Board of Directors has approved the spin-off of GRAIL. GRAIL is anticipated to spin off from Illumina on June 24, 2024, and has applied to list on Nasdaq as "GRAL."
"Today's announcement marks a milestone for Illumina and signals an important step forward for the company, since the divestiture of GRAIL is one of our 2024 priorities," said Jacob Thaysen, CEO of Illumina, in a published statement. "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."
Out and Back Again
GRAIL’s outlook has been unsettled since it was acquired by its former parent company, Illumina, in August 2021. But in September 2022, Illumina received a decision from the European Commission (EC) prohibiting the company’s acquisition of GRAIL, even though the US Federal Trade Commission had approved the deal. On December 5, 2022, the EC further outlined the divestiture measures it considered necessary to dissolve the transaction. Among them: restoration of GRAIL's independence from Illumina as a viable and competitive company executed “swiftly and with sufficient certainty.”
Illumina appealed the decision, and in July 2023 the European Commission fined GRAIL and Illumina for implementing their proposed merger before approval by the Commission, in breach of EU merger control rules. In October 2023, the European Commission said it was requiring Illumina to unwind the GRAIL acquisition. By December 2023 Illumina announced that the company would, indeed, divest GRAIL by the second quarter of 2024.
Illumina today shared the following stock distribution and trading details:
Stock Distribution
Illumina shareholders will retain their current shares of Illumina common stock and, on the distribution date, also receive one share of GRAIL common stock for every six shares of Illumina common stock held at the close of business on June 13, 2024, the record date for the distribution. The distribution is expected to occur at 12:01 a.m. ET on June 24, 2024, subject to customary conditions such as the effectiveness of the registration statement.
Illumina's Board of Directors has declared a pro rata dividend of 85.5% of the outstanding common stock of GRAIL to Illumina's shareholders, and Illumina will retain 14.5% of the outstanding shares of GRAIL common stock.
Fractional shares of GRAIL common stock will not be distributed to Illumina shareholders. Instead, the fractional shares of GRAIL common stock will be aggregated and sold in the open market, with the net proceeds distributed pro rata in cash payments to Illumina shareholders who would otherwise receive a fractional share of GRAIL common stock.
No action or payment is required by Illumina shareholders to receive shares of GRAIL common stock or cash in lieu of fractional shares. An Information Statement containing details regarding the distribution of the shares of GRAIL common stock, GRAIL's business and management following the spin-off, and other information regarding the spin-off will be made available to Illumina shareholders prior to the distribution date.
For U.S. federal income tax purposes, Illumina's U.S. shareholders (other than those subject to special rules) generally should not recognize gain or loss as a result of the distribution of GRAIL shares, except with respect to cash received in lieu of fractional shares. Illumina shareholders are urged to consult with their tax advisors with respect to the U.S. federal, state, and local or foreign tax consequences, as applicable, of the spin-off.
Trading Details
Beginning on or about June 12, 2024, and continuing until, but not including, the distribution date, it is expected that GRAIL common stock will trade on a "when-issued" basis on Nasdaq under the ticker symbol "GRAL WI." On Friday, June 21, 2024, when-issued trading of GRAIL common stock will end and on Tuesday, June 25, 2024, GRAIL common stock will begin trading "regular way" on Nasdaq under the ticker symbol "GRAL." Illumina will continue to trade on Nasdaq under the ticker symbol "ILMN."
Also beginning on or about June 12, 2024, and continuing until, but not including, the distribution date, it is expected that there will be two markets in Illumina common stock. Illumina shares that trade in the "regular way" market under the symbol "ILMN" will trade with an entitlement to shares of GRAIL common stock to be distributed pursuant to the distribution. Illumina shares that trade in the "ex-distribution" market under the symbol "ILMN WI" will trade without an entitlement to shares of GRAIL common stock.
Illumina shareholders who sell their shares in the "regular way" market before the distribution date, will also be selling their entitlement to receive GRAIL common shares in the distribution. Investors are encouraged to consult with their financial advisors regarding the specific implications of buying or selling Illumina common stock on or before the distribution date.