Illumina Inc. must release records related to the legal advice its board received before deciding to close a $7 billion re-acquisition of cancer detection startup Grail Inc., a deal ultimately unwound under antitrust scrutiny. Vice Chancellor Paul A. Fioravanti Jr. approved a “narrow, additional inspection” of documents stemming from the Illumina board’s decision.
Fioravanti’s decision partially grants a pension fund’s demand for internal books and records to investigate allegations that the DNA-sequencing company’s board hastily closed the transaction despite antitrust concerns. “Knowing what legal advice informed the board’s decision is necessary for the investigation,” Fioravanti stated, underscoring the absence of alternative sources for this information. The judge, however, denied the pension fund’s request for further board-level documentation from before the deal was made public.
The Pavers and Road Builders Benefit Fund initially sued Illumina for the records in February. Illumina argued in a pre-trial brief that the pension fund was engaging in a “fishing expedition.” Regulators in the US and European Union later declared the 2021 deal to reacquire Grail, which Illumina had originally spun off in 2016, to be in violation of antitrust laws, prompting Illumina to unwind the agreement.
The pension fund’s records lawsuit comes amidst other Chancery Court cases alleging that Illumina’s leadership overlooked significant risks associated with the Grail deal. The fund contended that Illumina had previously provided heavily redacted documents that were essentially useless for any investigative purpose. The fund had also intervened in a separate ongoing case brought by billionaire activist investor Carl Icahn, who criticized the board’s decision to finalize the deal without regulatory approval. Icahn’s lawsuit seeks to recoup $476 million in fines on behalf of Illumina and its shareholders.
Fioravanti issued a preliminary ruling against Icahn in January, instructing him to remove confidential information, including attorney-client privileged details, from his court filings. The Delaware Supreme Court refused to hear Icahn’s appeal of this ruling in April. The case remains a significant focal point as various stakeholders and legal professionals scrutinize the decision-making processes behind high-stakes mergers and acquisitions.
The case is titled Pavers & Road Builders Ben. Fund v. Illumina Inc., Del. Ch., No. 2024-0136. Further details can be viewed in the original article.