Carl Icahn speaks at Delivering Alpha in Latest York City, September 13, 2016.
David A. Grogan | CNBC
Carl Icahn on Wednesday said the biotech company Illumina should reinstate his former CEO “immediately”, his latest move in a brewing proxy fight with a biotech company.
Icahn said in an interview with Wall Street Journal that former executive Jay Flatley “obviously knows the DNA sequencing company and has done a very good job with it.” The activist-investor didn’t specify whether he had contacted Flatley.
Flatley ran the company 17 years before being replaced by current CEO Francis deSouza in 2016. San Diego-based Illumina credits Flatley for the company’s high growth over the last twenty years, noting that he took the company from $1.3 million in 2000 sales to $2.2 billion dollars in 2015. Flatley served as executive chairman and later chairman of the board of Illumina until 2021.
Icahn, who owns 1.4% of Illumina, criticized the company’s current leadership in an interview. He told the Journal that management is making a mistake by holding the $7.1 billion company Illumina, the maker of the 2021 Grail cancer test.
Icahn pressured Illumina to terminate the “disastrous” deal, which he claims worn out the company’s market value by $50 billion. He told the newspaper that Illumina couldn’t afford to keep the Grail in the current macroeconomic environment.
“They haven’t got the money, and particularly on this environment, they will not have the ability to proceed to fund this loss-making business,” he said. “I’m sorry to say, but in the event that they do not get rid of the Grail and deal with their core business, this company shall be on par with Eastman Kodaks in the world.” Icahn meant a pioneer of photography which went bankrupt in 2012.
“That is an urgent moment for the company and so they need someone who knows what they’re doing to rectify the situation,” he told the newspaper.
Jay Flatley, acting CEO of Zymergen
Mark Neuling | CNBC
Part of Icahn’s objection stems from Illumina’s decision to close the Grail deal without antitrust approval. Illumina defeated the U.S. Federal Trade Commission’s opposition to the deal in September, but remains to be fighting for approval from the EU’s executive arm, the European Commission.
Last 12 months, the European Commission blocked Illumina’s takeover of Grail, fearing it will stifle innovation and hurt consumer selection. The commission also released details of a planned order that might force Illumina to terminate the contract.
In an interview, Icahn said that the best way to liquidate the Grail can be a rights offering that might allow Illumina shareholders to resolve whether or not they wanted to spend money on Grail or not.
“The most effective part about the rights deal is finding a way to fund the Grail without adding debt to Illumina,” he told the Journal. “It is a way to allow Illumina shareholders to profit from buying the Grail at a possible bargain price, or selling their rights and getting the advantages that way.”
Illumina and Icahn didn’t immediately respond to a request for comment.