Updated: Carl Icahn proposes three new Illumina board members in proxy fight
A proxy fight is brewing at Illumina as activist investor Carl Icahn argues that the DNA sequencing giant is costing shareholders billions by following through with its Grail purchase amid antirust challenges.
In a letter to Illumina shareholders on Monday morning, Icahn stated that $50 billion of value has been wiped from the company’s market capitalization since August 2021.
“This value destruction is a direct result of a series of ill-advised (and frankly inexplicable) actions taken by the board of directors of our company in connection with the acquisition of GRAIL, Inc.,” Icahn wrote. “To paraphrase William Shakespeare’s Hamlet, something is rotten in the state of Illumina.”
Later in the day, Illumina responded, saying its Chair John Thompson and CEO Francis deSouza had “multiple conversations” with Icahn’s three proposed board additions: VDA Capital Management CEO and Hertz board member Vincent Intrieri, Icahn Enterprises general counsel Jesse Lynn and Icahn Capital portfolio manager Andrew Teno. The company called Icahn’s nominees lacking in “relevant skills and experience.”
The Wall Street Journal first reported late Sunday night that the billionaire wanted to nominate three people to the board of Illumina. The San Diego company recorded a $3.91 billion goodwill impairment charge on the Grail acquisition, Illumina said in its recent quarterly update, following antitrust probes into the deal.
Illumina said Icahn’s letter “neither recognizes the real value that GRAIL can provide to Illumina’s shareholders, nor reflects an understanding of the regulatory process.” In December, the European Commission ordered Illumina to unwind the deal. Illumina said it is “moving as quickly as possible to arrive at a resolution” and working toward a divesture if its appeal fails.
Grail was originally part of Illumina but was spun out. Illumina later reabsorbed Grail, arguing the deal would speed up the commercialization of cancer tests. Icahn disagreed with the moves in his letter.
“The management team and board of directors that created this mess would be fired immediately and a thorough investigation would be conducted to ascertain whether they engaged in gross negligence (or even worse),” Icahn added in his letter.
Illumina’s stock jumped jumped as much as 20% on the news, reflecting that investors have grown impatient over headwinds from the Grail acquisition. Former CEO Jay Flatley recently told the Financial Times that Grail was overpriced when Illumina bought it for $7 billion. Besides scrutiny over Grail, Illumina faces increased competition, including from a Chinese rival that recently began selling its sequencers in the US.
Illumina’s board includes Nobel laureate Frances Arnold, former FDA Commissioner Scott Gottlieb, ex-IBM veteran John Thompson and soon-to-be Biogen chair Caroline Dorsa, among others.
Editor’s note: This story has been updated to include news about Illumina’s stock price this morning, details from Carl Icahn’s letter to shareholders and Illumina’s response.