Illumina Must Release Records of Legal Advice for Grail Deal

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. said Tuesday he approved a “narrow, additional inspection” of documents related to the Illumina board’s decision, partially granting a pension fund’s demand for internal books and records to investigate allegations the DNA-sequencing company’s board rushed to wrap up the transaction despite antitrust worries.

Knowing what legal advice informed the board’s decision to close the merger is “necessary” for the investigation, the judge said, ruling after a one-day trial last month. “There’s no other apparent source for this information,” he said.

He rejected the pension fund’s demand for additional board-level information from before the deal was publicly announced, among other records.

The Pavers and Road Builders Benefit Fund sued Illumina for the records in February. Illumina argued in a pre-trial brief that the pension fund had “embarked upon nothing more than a fishing expedition.”

Regulators in the US and European Union eventually determined the 2021 deal to acquire Grail, which Illumina spun off in 2016, violated antitrust laws, and Illumina agreed to unwind the agreement. Grail began trading on Nasdaq on June 25.

The pension fund’s records lawsuit came amid a handful of Chancery Court cases focused on claims that Illumina’s leaders ignored risks in the Grail deal. The fund said Illumina previously released only heavily redacted files files that were “effectively useless as an investigative tool,” according to a pre-trial brief.

The pension fund previously intervened in an ongoing case brought by billionaire activist investor Carl Icahn, who has criticized the board’s decision to close the deal without government approval. Icahn’s lawsuit seeks to recoup $476 million in fines on behalf of Illumina and its investors.

Fioravanti issued a preliminary ruling against Icahn in January, ordering him to strip his court filings of confidential information—including information subject to attorney-client privilege—that he got from his appointee to Illumina’s board. The Delaware Supreme Court refused to hear Icahn’s appeal of that ruling in April.

The pension fund is represented by Andrews & Springer and Cohen Milstein Sellers & Toll. Illumina is represented by Potter Anderson and Cravath Swaine & Moore.

The case is Pavers & Road Builders Ben. Fund v. Illumina Inc., Del. Ch., No. 2024-0136, bench ruling 7/16/24.