Illumina completes the divestiture of GRAIL

Rhea-AI Summary

Illumina has successfully completed the spin-off of GRAIL, which will start trading independently on Nasdaq under the ticker 'GRAL' on June 25. Illumina will retain a 14.5% share in GRAIL and continue supporting it with its sequencing technology. Additionally, Illumina announced it will release its Q2 2024 earnings results on August 6 and provide a strategy update on August 13. The divestiture process included a distribution of 85.5% GRAIL shares to Illumina shareholders and a $750 million credit facility.

Positive

• Successful completion of GRAIL spin-off.
• GRAIL to trade independently as 'GRAL' on Nasdaq.
• Illumina retains a 14.5% share in GRAIL.
• Continued support from Illumina's sequencing technology.
• Distribution of 85.5% shares of GRAIL to Illumina shareholders.
• No significant tax implications for U.S. shareholders from the spin-off.

Negative

• Borrowed $750 million at a 6.70% interest rate for the divestiture.
• Fractional shares not distributed, sold in the open market instead.

Insights

Financial Analyst

The divestiture of GRAIL by Illumina is a significant event that will have long-term financial impacts on both companies. Illumina retaining a 14.5% stake in GRAIL is a strategic move, potentially allowing it to benefit from GRAIL’s future growth without the burden of direct management. This retained stake also indicates a level of confidence in GRAIL's future performance.

From a financial perspective, the $750 million credit facility and the borrowing rate of 6.70% are notable. This debt financing is critical for investors to watch, as it will impact Illumina’s leverage and interest obligations. Additionally, paying close attention to the financial results to be announced on August 6 will be crucial, as they will provide deeper insights into the company’s post-divestiture financial health.

Investors should be aware of potential short-term volatility due to the spin-off and new trading status of GRAIL. Long-term implications include possible benefits from reduced operational complexities and focused attention on Illumina's core businesses.

Market Research Analyst

The spin-off of GRAIL from Illumina to become an independent public company is a significant event in the biotech and cancer diagnostics sectors. GRAIL’s new ticker symbol “GRAL” and its independent trading status on Nasdaq will allow it to operate with more autonomy, which can foster innovation and potentially accelerate its progress in cancer detection technologies.

This strategic move can also be seen as Illumina’s effort to streamline its operations and focus on its core competencies in next-generation sequencing. By separating from GRAIL, Illumina can hone in on its primary business areas and leverage its technological prowess to catalyze further advancements in the industry.

For retail investors, this means evaluating both companies' individual growth potentials. GRAIL’s promise lies in its groundbreaking cancer detection technologies, while Illumina’s strength remains in its sequencing technologies. Observing how each company capitalizes on its market will be key for future investment decisions.

Legal Expert

The legal implications of the GRAIL spin-off are worth noting, particularly the distribution strategy where Illumina shareholders received one share of GRAIL common stock for every six shares of Illumina stock held. This kind of distribution is designed to ensure a seamless transition for shareholders, but it also requires close examination of tax consequences.

For U.S. federal income tax purposes, the distribution is generally tax-neutral, except for fractional shares sold in the open market. The details surrounding the distribution agent's role and the method of fractional share handling are meticulously planned to minimize shareholder inconvenience and maximize compliance with regulatory requirements.

From a legal perspective, investors should consult their tax advisors to understand the full impact of this spin-off on their individual tax situations. Additionally, staying informed about any future regulatory filings and compliance updates from both Illumina and GRAIL will be important for ongoing investment transparency and security.

• GRAIL spin-off complete; GRAIL to begin regular way trading as "GRAL" on June 25
• Illumina to issue second quarter 2024 results on August 6; leadership to present Strategy Update on August 13

SAN DIEGO, June 24, 2024 /PRNewswire/ -- Illumina, Inc. (NASDAQ: ILMN) today announced the successful completion of the spin-off of GRAIL. This milestone follows the company's previously announced plans to divest GRAIL, and GRAIL is now a public and independent company. GRAIL will begin regular way trading on Nasdaq on Tuesday, June 25 under the ticker symbol "GRAL." Illumina will continue to trade on Nasdaq under the ticker symbol "ILMN."

"With the completion of the spin-off of GRAIL, we have achieved our goal of divesting GRAIL in a manner that allows its breakthrough technology to continue benefiting patients," said Jacob Thaysen, CEO of Illumina. "Illumina will maintain a minority share of 14.5% in the company. GRAIL plays a critical role in the fight against cancer, and while the company is no longer part of Illumina, we remain confident in its future and will continue to support GRAIL with our sequencing technology, end-to-end workflows, and suite of services."

Later this week, Illumina will file an 8-K/A providing historical unaudited pro forma financial information and will provide supplemental non-GAAP information on its investor relations website at https://investor.illumina.com.

Illumina also announced it will issue results and host its earnings call for the second quarter of 2024 following the close of market on Tuesday, August 6, 2024. Illumina will also host a virtual Strategy Update on Tuesday, August 13, 2024, beginning at 8:00 am Pacific Time (11:00 am Eastern Time) and running for approximately two hours. Additional details for these events will be announced in the coming weeks and provided on Illumina's investor relations website, https://investor.illumina.com. Replays of these events will be posted on Illumina's investor relations website after each event and for at least 30 days following.

"As we turn the page, we are excited to share our plan to accelerate topline growth, achieve operational excellence, deliver for our customers, and maximize value for shareholders in our upcoming strategy update," said Thaysen. "Illumina is prepared to lead the next era of innovation in next generation sequencing by continuing to focus on strengthening our business and catalyzing the industry with an even greater focus on our customers' priorities."

Financing Information

As previously disclosed, on June 17, 2024, Illumina entered into a 364-day delayed draw credit agreement that provided for a senior unsecured term loan credit facility in an aggregate principal amount of up to $750 million. The credit facility was drawn in full on June 20, 2024, and the proceeds, together with cash from Illumina's balance sheet, were used to fund cash to the balance sheet of GRAIL in connection with Illumina's divestment of GRAIL. The current borrowing rate under the credit facility is approximately 6.70%.

Distribution Details

The separation was achieved through the distribution of 85.5% of the outstanding shares of GRAIL to holders of Illumina common stock at 12:01 a.m. ET on June 24, 2024 (the "Distribution Date"). In addition to retaining their shares of Illumina common stock, Illumina shareholders received one share of GRAIL common stock for every six shares of Illumina stock held as of close of business on the record date of June 13, 2024. Illumina retained 14.5% of the outstanding shares of GRAIL common stock.

On Tuesday, June 25, 2024, the first trading day following the Distribution Date, GRAIL will begin trading "regular way" on Nasdaq under the ticker symbol "GRAL." There will no longer be two markets in Illumina common stock and Illumina will continue to trade on Nasdaq under the ticker symbol "ILMN."

Fractional shares of GRAIL common stock were not distributed to Illumina shareholders and are instead being aggregated and sold in the open market. The net proceeds will be distributed pro rata, in cash, to Illumina shareholders who would otherwise have received a fractional share of GRAIL common stock.

For U.S. federal income tax purposes, Illumina's U.S. shareholders (other than those subject to special rules) generally should not recognize a 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.

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 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, Inc.

GRAIL, Inc., 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. For more information, visit grail.com. 

Contacts

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

View original content:https://www.prnewswire.com/news-releases/illumina-completes-the-divestiture-of-grail-302180656.html

SOURCE Illumina, Inc.

FAQ

When will GRAIL start trading independently?

GRAIL will begin trading independently on Nasdaq on June 25 under the ticker symbol 'GRAL'.

What percentage of GRAIL shares does Illumina retain?

Illumina retains 14.5% of GRAIL shares post-spin-off.

When will Illumina release its Q2 2024 earnings results?

Illumina will release its Q2 2024 earnings results on August 6, 2024.

What is Illumina's plan for GRAIL following the spin-off?

Illumina will continue to support GRAIL with its sequencing technology, end-to-end workflows, and suite of services.

What was the borrowing rate for Illumina's $750 million credit facility?

The borrowing rate for Illumina's $750 million credit facility is approximately 6.70%.