Carl Icahn’s Proxy Fight with Illumina over Grail Acquisition

Activist investor Carl C. Icahn is currently engaged in a proxy fight with biotech company Illumina over its acquisition of cancer blood developer Grail. Icahn believes that the acquisition has wiped out $50 billion in the company’s market value and is calling for it to be unwound.

Icahn Pushes for Former CEO Jay Flatley to Helm Illumina Immediately

As part of his campaign, Icahn is also pushing for former CEO Jay Flatley to be brought back to helm Illumina immediately. Flatley is credited with the company’s high growth in the last two decades, from $1.3 million in sales in 2000 to $2.2 billion in 2015.

Icahn Believes Illumina Can’t Afford to Keep Grail under Current Macro-Economic Conditions

Icahn warns that if Illumina does not get rid of Grail and focus on its core business, it is on a road downhill like Eastman Kodak. According to Icahn, Illumina can’t afford to keep Grail under current macro-economic conditions.

European Antitrust Regulators Scrutinizing Grail Deal

Furthermore, European antitrust regulators are scrutinizing the Grail deal, and a final decision is expected in late 2023 or early 2024.

Illumina Defends Its Board and Actions

In response to Icahn’s claims, Illumina defends its board and actions. The company claims that D&O insurance and other protections are standard for companies and support directors in making decisions in the best interests of shareholders. Additionally, Illumina follows appropriate risk management and disclosure practices and regularly shares relevant corporate risk factors.

Seeking to Change Illumina’s Board

Icahn owns a 1.4% stake in Illumina and is pushing for board seats. He is presenting his board nominees during the company’s annual meeting of shareholders.

Illumina’s Market Cap Shrinks from $75 Billion to $34 Billion

Since the Grail deal, Illumina’s market cap has shrunk from roughly $75 billion to $34 billion. Grail claims to offer the only commercially available early screening test that can detect more than 50 types of cancers through a single blood draw and generated $55 million in revenue in 2022.

Illumina’s Plans to Buy Grail

Illumina announced its plan to buy Grail in September 2020. The acquisition, however, continues to face opposition from Icahn and European antitrust regulators.

Illumina Writes Down Nearly Half the Value of the Deal

In addition, Illumina wrote down nearly half the value of the deal due to negative impacts of current capital market conditions and higher discount rates.

Overall, Carl Icahn’s proxy fight with Illumina over Grail acquisition has drawn significant attention from investors and regulators alike. With European antitrust regulators scrutinizing the deal and Icahn pushing for change at Illumina, it remains to be seen what the future holds for both companies.

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