USA — Activist investor Carl Icahn has renewed his assault on Illumina, urging the removal of specific directors just a day after the company announced its decision to divest cancer diagnostic test maker Grail.
Illumina’s stock experienced a sharp decline, which Icahn attributes to the controversial US$7.1-billion Grail acquisition, resulting in a 75% reduction and a loss of US$55 billion in shareholder value.
In a letter addressed to shareholders on Monday, Icahn, who holds a 1.4% stake in Illumina, expressed his distrust in the legacy directors overseeing the Grail disposal.
He emphasized the need to prevent these directors from influencing Illumina’s trajectory, citing their history of “reckless decision-making and value destruction.”
Earlier this year, Icahn initiated a proxy battle against Illumina, leading to significant board changes. The removal of board chairman John Thompson and the addition of Icahn Capital portfolio manager Andrew Teno to the board were part of the outcomes.
Former CEO Francis deSouza also stepped down following Icahn’s pressure. Icahn subsequently filed a lawsuit against the board, alleging a breach of fiduciary duties related to Illumina’s completion of the Grail transaction without obtaining proper regulatory approvals.
While Icahn did not delve into specifics about his plans, sources familiar with the matter suggest that seven directors, excluding Teno, Scott Ullem, Stephen MacMillan, and the new CEO Jacob Thaysen, could be targeted for removal.
Illumina’s decision to reverse its acquisition of Grail came after a U.S. appeals court sided with the Federal Trade Commission (FTC), affirming that the acquisition posed a threat to competition in the cancer detection tests market.
The divestiture process is set to unfold through a third-party sale or capital markets transaction, aligning with the European Commission’s order issued in October. Illumina aims to finalize the divestiture terms by the end of the second quarter of 2024.
However, Canaccord Genuity analyst Kyle Mikson anticipates a challenging divestiture process. Illumina continues to contest the European Commission’s jurisdiction in the European Court of Justice, a factor that Mikson believes could impact the company’s specific plans for divesting Grail.