Home Markets Illumina shareholders oust chairman, CEO survives Carl Icahn battle

Illumina shareholders oust chairman, CEO survives Carl Icahn battle

by SuperiorInvest

Rafael Henrique | Lightrocket | Getty Images

Activist investor Carl Icahn received enough support on Thursday Illumina shareholders to oust the biotech company’s chairman.

The shareholders installed John Thompson as chairman. An Illumina spokesman said a new chair would be chosen in the next few weeks.

Icahn urged shareholders to vote CEO Francis deSouza and Thompson off the nine-member board. DeSouza survived the proxy fight.

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

The vote was announced after Illumina’s annual meeting, marking a decisive end to a a two-month proxy fight between Icahn and the company through a controversial acquisition.

In a statement, Illumina thanked Thompson for his service over the years and said his management and business experience were deeply valued.

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

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

The vote is a blow to Illumina, which has staked claim Icahn’s three nominees they lack “relevant skills and experience” and should “jeopardize progress” the biotech company’s core DNA sequencing business.

Battle for the Grail

Icahn accused Illumina’s executive management and board of directors of poor oversight, particularly with regard to Acquisition for $7.1 billion Grail cancer test maker in 2021.

He called on the company to terminate the “absurd and questionable” deal and to oust deSouza “immediately.”

Icahn criticized the executive for accepting massive salary jump despite a sharp decline in the company’s market value.

Illumina’s market cap fell to about $33 billion from about $75 billion in August 2021, the month it closed its Grail acquisition.

Much of Icahn’s opposition to the deal stems from Illumina’s decision to close it without the approval of antitrust regulators in the US and Europe.

Federal Trade Commission in April ordered Illumina walked away from the acquisition over concerns it would stifle competition and innovation.

The FTC’s decision will overturn the administrative judge’s decision September a decision that rejected the agency’s original challenge to the deal.

Due to similar concerns, the European Commission, the executive body of the European Union, blocked the agreement last year.

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

The company has repeatedly defended its acquisition of Grail.

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

The CEO also promoted Grail’s 100% income growth during the first quarter compared to the same period a year ago.

In 2022, Grail will generate around $55 million in revenue. Illumina expects to earn up to $110 million this year.

Icahn faced his own criticism during the proxy battle.

Notable short seller Hindenburg Research defendant Icahn Enterprises overstating and comparing it to “Ponzi-like economic structures”.

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

CNBC’s Spencer Kimball contributed to this report.

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