Illumina Board of Directors approves spin-off of GRAIL; declares spin-off dividend of GRAIL shares

Rhea-AI Summary

Illumina announced the spin-off of GRAIL, scheduled for June 24, 2024, with GRAIL applying to list on Nasdaq as 'GRAL.' Illumina will distribute 85.5% of GRAIL's shares to its shareholders, retaining a 14.5% stake. Shareholders will receive one GRAIL share for every six Illumina shares held as of June 13, 2024, with trading on a 'when-issued' basis beginning around June 12, 2024. Regular trading for GRAIL commences on June 25, 2024. Fractional GRAIL shares will be sold, and proceeds distributed to shareholders. Illumina assures no U.S. federal income tax implications for shareholders, except for cash received in lieu of fractional shares.

Positive

• Illumina will retain a strategic 14.5% stake in GRAIL.
• Shareholders receive additional value with one GRAIL share for every six Illumina shares.
• GRAIL expects to enhance its market presence by listing on Nasdaq.
• No U.S. federal income tax implications for most shareholders regarding the distribution.

Negative

• Fractional shares of GRAIL will not be distributed, potentially diminishing shareholder value.
• Shareholders must understand the implications of 'when-issued' trading to avoid unintentional sale of entitlements.

Insights

Financial Analyst

Illumina's spin-off of GRAIL represents a significant $8 billion valuation for the latter, a company at the forefront of early cancer detection. This move can be seen as a strategic effort by Illumina to unlock value and focus more on its core genomics business. From a financial standpoint, the spin-off dividend of GRAIL shares at a 1:6 ratio for Illumina shareholders is noteworthy, as it provides them with direct exposure to GRAIL's potential growth.

However, investors should be aware that Illumina will still retain a 14.5% minority stake in GRAIL, indicating a level of confidence and interest in the future prospects of the company. The fractional shares being sold on the open market and converted to cash could create some liquidity, but it might also pose minor complexities for shareholders.

In the short term, this spin-off could lead to fluctuations in Illumina’s stock price due to market reactions to the divestiture. Long-term, if GRAIL’s early cancer detection technologies prove to be successful, it could potentially make a significant impact on the biotechnology industry and drive substantial returns for both Illumina and GRAIL investors.

Market Research Analyst

The separation of GRAIL from Illumina is not just a financial maneuver but a strategic realignment that could change market dynamics. GRAIL, listing under the ticker 'GRAL,' is poised to capitalize on its niche in cancer detection, potentially disrupting the medical diagnostics market. The expected 'when-issued' trading on June 12th and the 'regular way' trading start on June 25th suggest robust investor interest even before the official separation, underlining market confidence in GRAIL's business model.

Investors should consider the broader implications of this spin-off. For Illumina, the move allows a sharper focus on its core competencies in genomics while enabling GRAIL to independently pursue advancements in cancer diagnostics. This spin-off might also attract new investors specifically interested in the health tech sector.

Furthermore, the dual trading of Illumina shares could lead to temporary volatility, as investors reposition their portfolios to align with the new structure. Understanding these dynamics and market sentiments can help retail investors make more informed decisions regarding their holdings in both companies.

Medical Research Analyst

The spin-off of GRAIL from Illumina is particularly significant for the medical research community. GRAIL's mission to revolutionize early cancer detection could receive enhanced focus and resources as an independent entity. This could accelerate the development and commercialization of its multi-cancer early detection tests. Illumina's continued minority stake signifies ongoing collaboration, which could integrate state-of-the-art sequencing technologies into GRAIL's offerings.

From a stakeholder perspective, this spin-off presents a dual opportunity. Illumina can concentrate on advancing genomic sequencing, potentially improving cost-effectiveness and scalability. Meanwhile, GRAIL can intensify its efforts on early cancer detection, possibly leading to earlier interventions and better patient outcomes, ultimately transforming the oncology landscape.

For investors, the potential upside lies in GRAIL's success with its pipeline products and the broader adoption of its technologies. However, there are inherent risks associated with clinical trials and regulatory approvals that should be carefully considered.

• "When-issued" trading expected to begin on or about June 12, 2024
• Record date for distribution of GRAIL shares will be June 13, 2024
• Distribution date for GRAIL shares anticipated to be June 24, 2024

SAN DIEGO, June 3, 2024 /PRNewswire/ -- Illumina, Inc. (NASDAQ: ILMN) today 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. "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."

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. 

For more information about the distribution, please contact the distribution agent, Computershare Trust Company, N.A., at 150 Royall Street, Canton, MA 02021 or at the telephone number 877-373-6374. 

Use of forward-looking statements 

Some of the statements in this press release, particularly those relating to the ability to successfully complete the spin-off on a tax-free basis, within the expected time frame or at all, are forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Actual results could differ materially from expectations expressed or implied in the forward-looking statements if one or more of the underlying assumptions or expectations prove to be inaccurate or are unrealized. Important factors that could cause actual results to differ materially from such expectations are and will be detailed in (i) with respect to Illumina, Illumina's most recent Annual Report on Form 10-K and subsequent Quarterly Report on Form 10-Q, including in each case under the heading Risk Factors, and in Illumina's other filings with the U.S. Securities and Exchange Commission (the "SEC") and (ii) with respect to GRAIL, GRAIL's registration statement on Form 10 filed with the SEC on May 6, 2024 (as amended and further supplemented). These forward-looking statements are based on management's current expectations and are subject to certain risks, uncertainty, and changes in circumstances including, without limitation, whether the spin-off will be consummated on the expected terms, or at all. Neither Illumina nor GRAIL undertake responsibility for updating these statements, and these statements speak only as of the date of this press release. 

About Illumina

Illumina is improving human health by unlocking the power of the genome. Our focus on innovation has established us as a global leader in DNA sequencing and array-based technologies, serving customers in the research, clinical, and applied markets. Our products are used for applications in the life sciences, oncology, reproductive health, agriculture, and other emerging segments. To learn more, visit www.illumina.com and connect with us on X (Twitter), Facebook, LinkedIn, Instagram, TikTok, and YouTube. 

About GRAIL 

GRAIL is a healthcare company whose mission is to detect cancer early, when it can be cured. GRAIL is focused on alleviating the global burden of cancer by using the power of next-generation sequencing, population-scale clinical studies, and state-of-the-art machine learning, software, and automation to detect and identify multiple deadly cancer types in earlier stages. GRAIL's targeted methylation-based platform can support the continuum of care for screening and precision oncology, including multi-cancer early detection in symptomatic patients, risk stratification, minimal residual disease detection, biomarker subtyping, treatment and recurrence monitoring. GRAIL is headquartered in Menlo Park, CA with locations in Washington, D.C., North Carolina, and the United Kingdom. GRAIL, LLC, is a subsidiary of Illumina, Inc. (NASDAQ: ILMN) currently held separate from Illumina, Inc. under the terms of the Interim Measures Order of the European Commission. For more information, visit grail.com. 

Illumina investors: 
Salli Schwartz 
858-291-6421 
IR@illumina.com 

Illumina media: 
Bonny Fowler
740-641-5579
PR@illumina.com 

GRAIL investors: 
Alex Dobbin 
IR@grail.com 

GRAIL media: 
Trish Rowland 
Kristen Davis 
PR@grail.com 

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SOURCE Illumina, Inc.

FAQ

When will the spin-off of GRAIL from Illumina take place?

The spin-off is scheduled for June 24, 2024.

What is the record date for the distribution of GRAIL shares?

The record date for the distribution is June 13, 2024.

When will GRAIL shares begin trading on Nasdaq?

Regular trading for GRAIL shares will start on June 25, 2024.

How many GRAIL shares will Illumina shareholders receive?

Shareholders will receive one GRAIL share for every six Illumina shares held.

What is the ticker symbol for Illumina post-spin-off?

Illumina will continue trading under the ticker symbol 'ILMN.'

Will there be tax implications for Illumina shareholders in the U.S.?

Generally, there should be no U.S. federal income tax implications for shareholders, except for cash received in lieu of fractional shares.

What happens to fractional shares of GRAIL?

Fractional shares will be sold in the open market, with proceeds distributed to shareholders pro rata.

What is 'when-issued' trading for GRAIL shares?

'When-issued' trading allows GRAIL shares to trade before the official distribution date, starting around June 12, 2024.