Icahn Escalates Boardroom Battle at Illumina with Second Proxy Challenge

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In a letter to fellow shareholders, Icahn criticized the Grail deal for its regulatory hurdles and its role in diminishing shareholder value, with Illumina’s stock plummeting 75%. Though he welcomed the divestiture of Grail, Icahn emphasized that further steps are necessary for the company’s rehabilitation. He specifically targets the removal of “legacy conflicted directors” from the board, holding them accountable for what he perceives as irresponsible decision-making and destruction of shareholder value.

Market Overview:
-Activist investor Carl Icahn reignites his battle with Illumina, preparing a second board challenge just days after the company announces Grail divestment.
-Blaming the $7 billion Grail acquisition for sinking share price, Icahn targets “legacy conflicted directors” for removal.
-Illumina shares rise on Grail news, but potential proxy fight casts uncertainty over future direction.

Key Points:
-Less than 24 hours after Illumina’s Grail divestiture announcement, Icahn lays out plans to oust directors in a scathing letter to shareholders.
-He blames the board for the 75% drop in Illumina’s stock price, attributing it to the “reckless” Grail deal.
-While applauding the Grail divestment, Icahn argues the board remains untrustworthy and needs a major overhaul.
-Only four directors, including Icahn’s own candidate, are deemed acceptable, suggesting potential removal of up to seven board members.

Looking Ahead:
-Icahn’s second proxy fight promises a contentious battle for control of Illumina’s board.
-The increased presence of hedge funds in Illumina’s shareholder base could favor Icahn’s campaign.
-The outcome of the proxy fight will determine the future direction of Illumina, including potential leadership changes and strategic rewrites.
-Investors face another period of volatility as the drama unfolds, with Icahn’s track record of success keeping him a formidable opponent.

Icahn’s strategy seems to be shaping up for a significant board reshuffle, potentially challenging up to seven directors. This move could include influential figures such as a Nobel laureate and a former U.S. Food and Drug Administration Commissioner. The details of his plan remain undisclosed, but speculation suggests that Icahn’s dissatisfaction extends to most of the board, with exceptions being the newly appointed CEO Jacob Thaysen, Scott Ullem, Stephen MacMillan, and his previous appointee, Teno.

This intensifying boardroom drama at Illumina coincides with an evolving shareholder landscape, marked by an increasing presence of hedge funds in the company’s investor base. Notably, ValueAct, another activist firm, recently disclosed a new stake in Illumina. The heightened interest of hedge funds is often perceived positively in such scenarios, as they are typically more inclined to support radical changes proposed by activists like Icahn.

This article was originally published on Quiver Quantitative