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San Diego-based medical technology company Illumina has lost $50 billion in value from the company's market capitalization since August 2021. Photo by Michael Vi
San Diego-based medical technology company Illumina has lost $50 billion in value from the company's market capitalization since August 2021. Photo by Michael Vi
Medical TechnologyNewsRegionSan Diego

Illumina warns shareholders of possible hostile takeover by Carl Icahn

REGION — Leaders of San Diego-based medical technology company Illumina today warned shareholders of an attempted proxy takeover of the company’s board of directors by Icahn Enterprises.

According to an Illumina statement, Carl Icahn — owner of the Florida-based conglomerate with stakes in energy, mining, auto retail and pharmaceuticals — plans to nominate two current employees and one former employee to the board during Illumina’s 2023 Annual Meeting of Shareholders, despite objections from current leadership.

“Icahn was explicit and unyielding in his demand that any resolution should give him outsized influence and control,” the statement from Illumina leadership read.

Illumina works on DNA sequencing and array-based technologies in medical genetics.

“We know from talking with many of you that there is extreme displeasure among the owners of Illumina,” Icahn wrote in a letter to fellow shareholders in the company. “$50 billion of value has been wiped from the company’s market capitalization since August 2021. 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,” he wrote.

Illumina’s independent chairman of the board, John Thompson, and CEO Francis deSouza, engaged in multiple conversations with Icahn and its nominating/corporate governance committee also met with the three nominees.

“The board has determined Icahn’s nominees lack relevant skills and experience, and that it is not in the best interests of shareholders to appoint Mr. Icahn’s three nominees to the Board of Illumina,” the statement reads. “The Board recommends that shareholders not support Mr. Icahn’s nominees.”

Icahn hopes to quickly restructure Illumina’s board following news that the sequencing company’s is again pushing an $8 billion deal to acquire GRAIL — Illumina’s own spinout company which makes a blood test that can purportedly detect dozens of cancers — despite regulatory hangups from both the U.S. Federal Trade Commission and European competition watchdogs in 2021.

“We are convinced that at least three shareholder representatives are needed on Illumina’s board to attempt to put an end to this insanity now before the reckless decision-making escalates into a no-return situation,” according to a letter from Icahn published in the Wall Street Journal.

Illumina leadership said the acquisition is a valuable one and see Icahn’s power play as a hostile takeover.

“Icahn’s letter neither recognizes the real value that GRAIL can provide to Illumina’s shareholders, nor reflects an understanding of the regulatory process,” the company statement reads. “Illumina is moving as quickly as possible to arrive at a resolution, with divestiture work already underway in advance of the European Commission’s divestiture order.”

Illumina’s board is led by an independent chair and all nine members of the board are independent with the exception of the CEO. More than half the board has been appointed within the past five years.

According to the company, shareholders are not required to take any action at this time. Illumina staff will file preliminary materials with respect to the annual shareholder meeting in coming weeks.

Icahn Enterprises has a history of takeovers — not all of which have panned out. In February 2016, Icahn Enterprises purchased Trump Entertainment Resorts, which owned the Hard Rock Hotel & Casino Atlantic City. The company sold the casino to the owners of Hard Rock Cafe for $50 million in May 2017 — a recoup of just four cents on the dollar, the L.A. Times reported.

The conglomerate also owns Pep Boys, CVR petroleum refining and nitrogen fertilizer manufacturing, American Railcar Industries, Viskase food products and Vivus pharmaceutical.

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