Why Illumina has a merger mess of its own making

For Illumina, the leading maker of DNA sequencing equipment, there was bad news and worse news Tuesday.

The bad news: The European Commission said it was blocking Illumina’s $8 billion acquisition of Grail, a firm focused on the early detection of cancer. The worse news? In its press release on the ruling, Illumina acknowledged that, although it will appeal, that may not prevent the European Commission from forcing it to divest Grail, which it purchased before regulatory approvals were in place.

At the start, there was a kind of “heads you lose, tails I win” kind of logic about Illumina’s decision to close the Grail purchase when European and U.S. regulators said they wanted to block it — and then to leave Grail operating at arm’s length. The logic went that Grail’s cancer diagnostic, Galleri, was in the process of being launched, and Grail would become more valuable over the next few years. If Illumina did eventually have to divest it, at least it would make a profit.

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