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Illumina Pushes Back Against Icahn's Proposed Board Nominees

NEW YORK – Pushing back against activist investor Carl Icahn’s maneuvers to start a proxy fight, Illumina issued a statement Monday claiming, among other things, that Icahn's director nominees "lacked relevant skills and experience" and "will damage Illumina's core business."

The statement is the latest salvo in a battle between the sequencing giant and billionaire activist investor Icahn, who controls about 2.2 million, or 1.4 percent, of Illumina’s shares and publicly criticized the company's merger with Grail last week and outlined his intention to take over three board seats with the goal of promptly divesting the cancer detection testing firm.

In its latest statement, Illumina underscored its "commitment to shareholder value" and said it is "moving as quickly as possible to work through the legal and regulatory processes to maximize value for shareholders with respect to Grail, including defining the conditions and options of a potential divestiture." The company said it has challenged the European Commission's (EC) jurisdiction to review the Grail acquisition, and the final decision is expected in late 2023 or early 2024.

"Winning a jurisdictional appeal eliminates any EC fine and gives the greatest optionality for Illumina to maximize value for shareholders," the company said. "If Illumina loses the EU jurisdictional appeal, the company will follow the terms of the final divestiture order, expeditiously and in a manner that is in the best interests of its shareholders."

Responding to a similar statement made by Illumina last week, Icahn accused the company of being "highly misleading and obfuscating the truth." "We don’t believe that it is possible for Illumina shareholders to receive the full value of Grail if Illumina pursues both the appeals process and the divestment process at the same time," he noted. "Any reasonable buyer would not waste the resources if they don’t believe Illumina’s directors will actually sell the asset."

Echoing its stance last week, Illumina, once again underscored that its board and management team "have a proven track record of successfully managing the core business, and a plan to resolve the acquisition of Grail expeditiously and in a manner that is in the best interests of Illumina's shareholders."

Icahn had noted in a March 15 response to Illumina's earlier statement that "It is insulting to shareholders to state that the board of directors represent the best interest of shareholders given that they have presided over one of the greatest fiascos in business history and $50 billion of value destruction for shareholders while losing only miniscule amounts for themselves."

"Although some of Mr. Icahn's points are not completely false, we believe that the appointment of new board members could be potentially destructive to the company's long-term strategy and growth potential," Canaccord Genuity analyst Kyle Mikson wrote in a note to investors on Monday. "In our view, it appears highly likely that Grail will be divested, and we believe the company would benefit from completing this process with relative urgency."