Illumina shareholders fire chairman, CEO survives battle with Carl Icahn

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Activist investor Carl Icahn won enough support from Illumina shareholders on Thursday to remove the chairman of the biotech company’s board of directors.

Shareholders ousted chairman John Thompson. An Illumina spokesperson said the new chair will be selected in the next few weeks.

Icahn urged shareholders to vote for the company’s CEO Francis de Souza and Thompson from the nine-member board of directors. DeSouza survived the battle through a proxy.

Shareholders also voted to appoint one of Icahn’s three board nominees, Andrew Teno, a portfolio manager at Icahn Capital LP, the company where Icahn manages investment funds.

The vote was announced following the Illumina annual meeting ending a two-month-long fiduciary battle between Icahn and the company over the controversial acquisition.

Illumina, in a statement, thanked Thompson for his many years of service, noting that his managerial and business experience is very valuable.

Earlier this month, proxy consulting firm Institutional Shareholder Services recommended that Illumina shareholders support Teno.

Icahn, who owns a 1.4% stake in Illumina in San Diego, has proposed two other director candidates who are current or former employees.

The vote came as a blow to Illumina, which said Icahn’s three nominees lack “relevant skills and experience” that “threatens the progress” of the biotech company’s core business of DNA sequencing.

Battle to Acquire the Grail

Icahn accused Illumina’s executive management and nine-member board of directors of poor oversight, especially regarding the company’s operations. $7.1 billion acquisition cancer test manufacturer Grail in 2021.

He urged the company to terminate the “absurd and dubious” deal and fire de Souza “immediately”.

Icahn criticized the chief executive for receiving a huge pay raise despite the company’s market value plummeting.

Illumina’s market capitalization fell to about $33 billion from about $75 billion in August 2021 when the company closed its acquisition of Grail.

Much of Aikan’s resistance to the deal stems from Illumina’s decision to shut it down without U.S. and European antitrust approval.

The Federal Trade Commission ordered Illumina to pull out of the acquisition in April for fear it would stifle competition and innovation.

The FTC’s decision overturns the administrative judge’s decision. September a decision that rejected the agency’s initial challenge to the deal.

The European Commission, the European Union’s executive arm, also blocked the deal last year over similar concerns.

Illumina is appealing both orders and expects final decisions in late 2023 or early 2024.

The company has repeatedly defended its acquisition of Grail.

DeSouza told CNBC last month that the deal “makes sense” because Illumina could significantly expand the market for Grail. early screening testwhich can detect more than 50 types of cancer with a single blood draw.

The CEO also noted a 100 percent increase in Grail’s revenue in the first quarter compared to the same period last year.

In 2022, Grail generated about $55 million in revenue. Illumina expects to make up to $110 million this year.

Icahn faced criticism of his own during the proxy battle.

Prominent seller Hindenburg Research accused Icahn Enterprises of being overpriced and likened it to “Ponzi-like economic structures”.

Icahn Enterprises called the claims “misleading and self-serving”.

— Spencer Kimball of CNBC contributed to this report.

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