Carl Icahn
Adam Jeffery | CNBC
Biotech company Illumina pushed back Monday against Carl Icahn’s proxy fight over the corporate’s acquisition of cancer test developer Grail, saying the activist investor’s board nominees “don’t add value.”
The San Diego-based DNA sequencing company released its latest response to Icahn’s sharp criticism of the $7.1 billion deal it accomplished in 2021, saying it’s committed to maximizing shareholder value as it really works with antitrust regulators to “define GRAIL’s path forward as expeditiously as possible.”
Icahn, who owns a 1.4% stake in Illumina, sent an open letter to the corporate’s shareholders last week saying the DNA sequencing company paid an excessive amount of for Grail and accomplished the “reckless” deal without getting European antitrust regulatory approval. He claimed those actions have worn out $50 billion in Illumina’s market value and “clearly shows that shareholders have lost faith in Illumina’s management team and board of directors.” Grail relies in Menlo Park, Calif.
Icahn also announced his intentions to nominate three members to Illumina’s board in the course of the company’s annual meeting of shareholders attributable to fears that the board “will pursue GRAIL until the top of time without regard to the quantity of value destruction they leave of their wake.”
“To paraphrase William Shakespeare’s Hamlet, something is rotten within the state of Illumina,” Icahn wrote. Illumina’s stock, which has lost greater than half its value from an August 2021 peak, jumped 17% after Icahn released his letter.
In its response Monday, Illumina underscored its efforts to work through ongoing regulatory opposition.
Last 12 months, the European Commission blocked the acquisition over concerns that it will hurt consumer selection and unveiled details of a planned order that will force Illumina to unwind the deal. That would result in a effective of as much as 10% of Illumina’s annual revenues, which hit greater than $4.5 billion last 12 months.
Illumina said it has challenged the European Commission, arguing the agency lacks jurisdiction to dam the merger between the 2 U.S. firms. A final decision is predicted in late 2023 or early 2024, the corporate noted. Illumina said winning a jurisdictional appeal would eliminate any potential effective and “gives the best optionality for Illumina to maximise value for shareholders.”
The corporate also claimed Icahn recognizes the worth of Grail to shareholders, pointing to a CNBC interview last week where Icahn referred to Grail as Illumina’s “best equipment.” Illumina added that the billionaire investor acknowledged that he doesn’t understand the regulatory process and has not offered ideas for a “rapid resolution” for Grail.
“Icahn has no ability to speed up the legal and regulatory processes and neither do his nominees,” Illumina said.
The corporate added it has interviewed each of Icahn’s nominees and located they “lacked relevant skills and experience.” That features Vincent Intrieri, the founder and CEO of VDA Capital Management who was previously employed by Icahn. It also includes General Counsel of Icahn Enterprises Jesse Lynn and Andrew Teno, a portfolio manager at Icahn Capital LP, an entity where Icahn manages investment funds.
Illumina touted Grail in its release, saying it has “tremendous long-term value creation potential.” Grail claims to supply the one commercially available early screening test that may detect greater than 50 kinds of cancers through a single blood draw, Illumina said. The test generated $55 million of revenue in 2022 and is slated to rake in as much as $110 million this 12 months, in line with Illumina.
The U.K.’s National Health Service is researching the test in a study with 140,000 participants, Illumina added. If the study is successful, the agency expects to check a million people within the U.K. in 2024.
