Illumina shareholders vote for lose-lose outcome
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Jonathan Guilford
NEW YORK, May 25 (Reuters Breakingviews) -Sometimes, everyone loses. Activist Carl Icahn on Thursday won a seat on the board of $30 billion gene-testing company Illumina ILMN.O, but fell short of the three he sought. Boss Francis deSouza, whose strategy attracted Icahn’s ire in the first place, won re-election, but shareholders protested against his pay. And investors hoping Illumina was in line for a big shake-up will be disappointed.
Icahn started lobbying for a board seat in March, criticizing Illumina’s purchase of cancer-detection company Grail GRAL.O – which Illumina had itself spun off in 2016. The $7 billion deal looked overpriced, and Illumina added insult to injury when it defied regulators by closing the acquisition before receiving their sign-off, which could result in substantial fines. Meanwhile, Illumina’s profitability slumped: Its core business’ operating margin fell to 11% in 2022 from 18% in 2021.
Yet Icahn has only got a little of what he wanted. His nominee Andrew Teno unseated Illumina chair John Thompson, but the activist’s other two candidates, including one meant to replace deSouza, flopped. That’s less than a compromise the company had offered Icahn in March. A half-victory might be particularly bruising since Icahn is being pursued by an activist of his own: short-seller Hindenburg Research. Icahn Enterprises IEP.O shares were down some 14% on Thursday.
Illumina emerges scuffed too. While shareholders didn’t oust deSouza, they did cast a non-binding vote disapproving of his $27 million pay package for 2022, which Icahn had also singled out. As for shareholders who jumped in more recently hoping a dose of Icahn would cure what ails Illumina, they are left nursing a 9% fall in the company’s shares on Thursday. Icahn didn’t exactly lose, but nobody won.
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CONTEXT NEWS
Illumina said on May 25 that shareholders had opted to elect one dissident board nominee put forward by activist investor Carl Icahn at the gene-sequencing company’s annual general meeting. Icahn candidate Andrew Teno will replace Illumina Chairman John Thompson. Shareholders did not elect Icahn’s two further nominees. They voted against a measure approving the company’s annual compensation.
Proxy advisory firms Institutional Shareholder Services and Glass Lewis had both recommended that investors vote for Teno. Glass Lewis had also backed Vincent Intrieri, who would have replaced Illumina Chief Executive Francis deSouza on the board.
Reuters earlier reported the likely result. Illumina shares were down around 9% at 3:30 p.m. (1930 GMT).
Editing by John Foley and Sharon Lam
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