USA —In a significant development, activist investor Carl Icahn has successfully garnered enough support from Illumina shareholders to remove the biotech company’s board chair, John Thompson.
Following the vote, a new chair will be selected in the coming weeks, as confirmed by an Illumina spokesperson.
However, Icahn’s attempt to oust CEO Francis deSouza was unsuccessful, as deSouza survived the proxy battle unscathed.
Icahn had urged shareholders to vote against both deSouza and Thompson, who were part of the nine-member board.
Despite failing to remove the CEO, Icahn’s influence prevailed in one aspect, as shareholders voted in favor of Andrew Teno, one of Icahn’s three board nominees. Teno, a portfolio manager at Icahn Capital LP, will join Illumina’s board.
The announcement of the voting results marked the conclusive end of a two-month proxy battle between Icahn and Illumina, centered around a contentious acquisition.
The clash stemmed from Icahn’s criticism of the company’s executive management and board, particularly regarding Illumina’s US$7.1 billion acquisition of Grail, a cancer test maker, in 2021.
Icahn has consistently called for the reversal of the “absurd and questionable” Grail deal and the immediate removal of CEO deSouza.
He has voiced concerns over poor oversight by the board and management, as well as deSouza’s substantial pay increase despite a significant decline in Illumina’s market value.
Illumina’s market capitalization has plummeted to around US$33 billion from approximately US$75 billion since the Grail acquisition in August 2021.
A key point of contention for Icahn was Illumina’s decision to close the deal without obtaining approval from antitrust regulators in the United States and Europe.
In April, the Federal Trade Commission (FTC) ordered Illumina to divest itself of the acquisition due to concerns about stifling competition and innovation.
This decision reversed an administrative judge’s earlier ruling in September, which had dismissed the FTC’s initial challenge to the deal. Similarly, the European Commission blocked the acquisition in 2022 for similar reasons.
Illumina is currently appealing both the FTC’s and the European Commission’s orders, with final decisions expected in late 2023 or early 2024.
Throughout this process, the company has consistently defended its acquisition of Grail.
CEO deSouza emphasized the strategic value of the deal, highlighting the opportunity for Illumina to expand the market for Grail’s early screening test, capable of detecting over 50 types of cancers through a single blood draw.
DeSouza also highlighted Grail’s impressive revenue growth, reaching US$55 million in 2022 and an anticipated increase to US$110 million this year.
While Icahn emerged successful in his bid to reshape Illumina’s board, he faced his own criticism during the proxy battle.
Notable short seller Hindenburg Research accused Icahn Enterprises of being overvalued and likened it to “Ponzi-like economic structures.” In response, Icahn Enterprises refuted these claims as “misleading and self-serving.”
As the dust settles following the shareholder vote, Illumina prepares for a new phase with a revised board composition and continued legal battles over the Grail acquisition.
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