Carl Icahn Calls for Return of Former Illumina CEO as Proxy Fight intensifies

Against the backdrop of a brewing proxy battle with Illumina, Carl Icahn said Tuesday that the biotech company needs to bring back its former CEO "immediately."  

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It was mentioned in an interview that Icahn thought Flatley "obviously has a good grasp of DNA sequencing and did a good job with the company." Icahn did not specify whether he had been in contact with Flatley during his tenure at the company. 

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It was under Flatley's leadership that the company flourished for 17 years until he was succeeded by the current CEO Francis deSouza in 2016. Using the example of Illumina, the San Diego-based company credits Flatley with the company's rapid growth in the last two decades, pointing out that he took the company from $1.3 million in sales in 2000 to $2.2 billion in 2015. Since the end of his term as chairman of Illumina's board at the beginning of 2021, Flatley has served as executive chairman.

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There was a nearly 4% jump in shares of Illumina on Wednesday morning.

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As the owner of a 1.4% stake in Illumina, Icahn has publicly lambasted the company's current management in the interview he gave. During his interview, he stated that Illumina's executive team is making the mistake of holding on to its acquisition of Grail, a cancer test developer. This is for its $7.1 billion acquisition in 2021. 

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It is Icahn who has been pressing Illumina to unwind this "disastrous" deal, which he claims has cost the company $50 billion in market value as a result of its destruction. Under the current macroeconomic conditions, he told the Trade Algo that Illumina cannot afford to keep Grail in its current form. 

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The company simply does not have the money to keep funding this money-losing business, and especially in the current economic climate they will not be able to do so," he said. As Icahn said, "If they do not get rid of Grail and focus on their core business, this company is on a path downhill like Eastman Kodaks, and if they do not get rid of Grail and focus on their core business, they will go the way of the Eastman Kodaks." He was referring to the famous photography pioneer that entered bankruptcy in 2012. 

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“The company is facing an urgent moment and they need someone who knows what to do to resolve the issue,” he told Trade Algo in an interview. 

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The reason Icahn has opposed the Grail deal in part is that Illumina decided to close the deal without securing the approval of antitrust regulators before closing the deal. There was some opposition to the deal from the Federal Trade Commission in September, but Illumina managed to get approval from the European Commission, the EU's executive body, which approved the deal earlier this year.

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There were concerns that Illumina's acquisition of Grail would stifle innovation and hurt consumer choice, so the European Commission last year blocked the acquisition of the company. Moreover, the commission revealed that an order is being planned that will force Illumina to unwind its investment in the company.

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According to Icahn, the best way to liquidate Grail would be through a rights offering that would allow Illumina shareholders to decide whether or not they want to invest in Grail, after which they can liquidate Grail. 

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"I believe the best thing about a rights offering is that it provides a way to finance Grail without adding to Illumina's debt burden," he told Trade Algo. "It is a way for Illumina shareholders to be able to get the benefit of buying Grail at an outlet price or to sell their rights and gain the benefit of purchasing Grail at this outlet price."

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Despite being contacted for comment, Illumina and Icahn were unable to respond immediately.