Illumina has signed an agreement to acquire US-based healthcare company GRAIL for cash and stock consideration of $8bn.

As per terms of the deal, GRAIL stockholders will secure $3.5bn in cash and $4.5bn in shares of Illumina common stock.

Illumina currently owns 14.5% of GRAIL’s shares outstanding, and up to 12% on a fully diluted basis.

The deal will also allow GRAIL stockholders to secure future payments, which represent a tiered single-digit percentage of certain GRAIL-related revenues.

Illumina created GRAIL in 2016 and spun out as a standalone company by offering its NGS technology.

The NGS technology is being used by GRAIL to develop advanced data science and machine learning, as well as construct the atlas of cancer signals in the blood to conduct multi-cancer early detection tests.

GRAIL has attracted around $2bn investment to advance its technology platform and develop Galleri multi-cancer screening test.

Galleri multi-cancer screening test has the capacity to detect over 50 cancer types

According to the company, an earlier version of Galleri holds the capacity to identify over 50 cancer types, of which 45 have no recommended screening in the US.

Galleri is expected to be commercially available in 2021 as a multi-cancer and laboratory-developed test for early cancer detection from the blood.

GRAIL intends to follow Galleri with future blood-based tests for cancer diagnosis, detection and post-treatment monitoring of cancer patients.

The acquisition of GRAIL will allow Illumina to expand its cancer screening, diagnosis and cancer monitoring portfolio.

Illumina president and CEO Francis deSouza said: “Over the last four years, GRAIL’s talented team has made exceptional progress in developing the technology and clinical data required to launch the Galleri multi-cancer screening test.”

Subject to customary closing conditions, the deal is expected to be completed in the second half of 2021. GRAIL will run as a standalone division within Illumina, upon completion of the deal.

Goldman Sachs is acting as exclusive financial advisor to Illumina, while Morgan Stanley is acting as exclusive financial advisor and Latham & Watkins is serving as legal advisor to GRAIL.

In January this year, Illumina and Pacific Biosciences of California have jointly agreed to terminate their previously announced merger deal.

Under the proposed agreement, which was signed in November 2018, Illumina was to acquire Pacific Biosciences at an enterprise value of approximately $1.2bn in cash.