Illumina Inc (NASDAQ:ILMN) stock rallied more than 20% following reports in the Wall Street Journal that activist investor Carl Icahn is preparing a proxy fight at the gene sequencing company after its acquisition of Grail Inc wiped $50 billion of value from its market capitalization.
In an open letter to shareholders Monday, Icahn said: “This value destruction is a direct result of a series of ill-advised (and frankly inexplicable) actions taken by the board of directors of our company in connection with the acquisition of GRAIL, Inc. To paraphrase William Shakespeare’s Hamlet, something is rotten in the state of Illumina.”
Illumina completed the takeover of Grail, a cancer-detection test maker, in August 2021. However, it had failed to first secure regulatory approval from the European Union, resulting in the European Commission ordering it to unwind the deal after earlier blocking it due to competition concerns. Illumina is opposing the order.
“Illumina’s share price performance, and the $50 billion of value destruction that has occurred since the Grail deal was closed, clearly shows that shareholders have lost faith in Illumina’s management team and board of directors,” Icahn continued. “Yet these individuals suffer no consequences or remorse. The members of Illumina’s management team and board of directors collectively own less than 0.1% of the company’s stock yet they feel entitled to take these reckless actions with our money.”
Icahn said efforts to find a way to help the company and fellow shareholders had failed to gain traction with the Illumina board, forcing it to launch a proxy contest to attempt to gain board representation.
This, he said, was “due to our fear that Illumina’s directors will pursue Grail until the end of time without regard to the amount of value destruction they leave in their wake.”
“We are today announcing our intention to nominate three highly qualified individuals to Illumina’s board of directors at the upcoming annual meeting of shareholders, who will tirelessly pursue justice for ALL shareholders,” Icahn said. “The reckless decision to close the Grail deal over the objections of European regulators created a staggering amount of risk.”
Illumina’s share traded 22% higher at $234 in early afternoon trade in New York.
Contact the author at stephen.gunnion@proactiveinvestors.com