Illumina Inc. has recently been facing some scrutiny following its $7.1 billion acquisition of Grail. On Monday, the company announced that it had received notice from Icahn Partners, stating that the organization is planning to nominate three candidates to the board. The reason for this move is due to Icahn’s concern over the acquisition and the impact it has had on shareholders.
The three candidates that Icahn plans to nominate are Jesse Lynn, Andrew Teno, and Vincent Intrieri. While Jesse Lynn and Andrew Teno are current Icahn employees, Vincent Intrieri is a former Icahn employee. The news of Icahn’s move was first reported by the Wall Street Journal, which highlighted that the acquisition was subject to regulatory scrutiny and has cost shareholders $50 billion.
Following this news, Illumina’s share prices rallied and were up about 18% in trading on Monday afternoon. This announcement puts Illumina in a difficult position, as it may have to go through a proxy fight if it fails to come to a resolution with Icahn.
Some experts believe that Icahn’s decision to nominate three candidates is a strategic move to ensure that the company’s interests are safeguarded. The acquisition has not gone smoothly, and it has been a cause of concern for some shareholders. Additionally, Icahn is well known for his activist investing style and has in the past pushed for changes in boards that he believes are not acting in the best interests of shareholders.
The acquisition of Grail was always going to be a risky move for Illumina. Grail is a startup that focuses on developing liquid biopsy tests for cancer detection. While the acquisition was seen as a good move for both companies, it has been hit with regulatory hurdles. The Federal Trade Commission recently announced that it was investigating the acquisition, and it remains to be seen how this will play out.
The $7.1 billion acquisition price also raised eyebrows, considering that Illumina had spun Grail off just a few years before the acquisition for a much lower price. Critics argue that Illumina is overpaying for Grail and that the acquisition is not worth the risk it poses.
It is worth noting that Illumina is no stranger to proxy fights. In 2016, the company faced a similar situation when venture capitalist investment firm Roche proposed to nominate six candidates to the board. Illumina was able to reach a settlement with Roche, and the nominees were not elected to the board.
However, the situation with Icahn may not be resolved as quickly. Icahn is a seasoned investor, and he is known for his tenacity when it comes to advocating for change. It is unclear what Icahn’s end goal is with the nomination of the three candidates. However, the fact that he is visibly concerned about the acquisition of Grail may indicate that he is looking to get more involved in the company’s decision-making process.
In the end, the nomination of the three candidates by Icahn Partners means that Illumina’s board will have to respond to the challenge. The company’s management will have to work hard to find common ground with Icahn to avoid a costly proxy fight. This issue also highlights the risks associated with acquisitions, especially when they come with a high price tag.
The ball is now in Illumina’s court, and it remains to be seen how the company will respond to the challenge. As of now, it seems like Icahn is not backing down from his position, and he is determined to see changes in the board’s makeup. The next few weeks and months will be crucial in determining how this situation will play out.
In conclusion, Icahn’s move to nominate three candidates to Illumina’s board highlights the challenges that the company is facing following its acquisition of Grail. The acquisition has been hit with regulatory hurdles, and it has been a cause of concern for some shareholders. The proxy fight that may ensue will be costly and time-consuming for both sides. It remains to be seen how Illumina will navigate this situation and whether they will be able to reach a settlement with Icahn. The situation also serves as a reminder of the risks that come with high-priced acquisitions.
