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Activist investor Carl Icahn got enough support from Thursday Illumina shareholders to fire the biotech company’s chairman.
Shareholders kicked chairman John Thompson. An Illumina spokesperson said a new seat will be chosen in the coming weeks.
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Icahn had urged shareholders to vote out the company’s CEO, Francis deSouza, and Thompson from the nine-member board of directors. DeSouza survived the proxy fight.
Shareholders also voted to install one of Icahn’s three board candidates, Andrew Teno, a portfolio manager at Icahn Capital LP, an entity where Icahn manages investment funds.
The vote was announced after Illumina’s annual meeting and marked a decisive end to a two-month proxy battle between Icahn and the company over a controversial acquisition.
Illumina thanked Thompson in a statement for his service over the years and said his leadership and business experience was greatly appreciated.
Earlier this month, proxy advisory firm Institutional Shareholder Services reported recommended that Illumina shareholders support Teno.
Icahn, who owns a 1.4% stake in San Diego-based Illumina, had put forward two other board candidates who are his current or former employees.
The vote is a blow to Illumina, which claimed Icahn’s three nominees lack “relevant skills and experience” and would “threaten the advancement” of the biotech company’s core DNA sequencing business.
Struggle to take over the Grail
Icahn has accused Illumina’s executive management and board of directors of poor oversight, especially with regard to the company’s Acquisition of $7.1 billion from cancer test maker Grail in 2021.
He has called on the company to reverse the “absurd and questionable” deal and oust deSouza “immediately”.
Icahn has slammed the executive for receiving a huge pay raise despite a steep fall in the company’s market value.
Illumina’s market cap is down to about $33 billion from about $75 billion in August 2021, the month Grail’s acquisition closed.
Much of Icahn’s resistance to the deal stems from Illumina’s decision to close it without approval from antitrust regulators in the US and Europe.
The Federal Trade Commission in April ordered Illumina to divest the acquisition over fears it would impede competition and innovation.
The FTC’s decision overturns that of an administrative law judge September ruling, which rejected the agency’s initial challenge to the deal.
The European Commission, the executive body of the European Union, also blocked the deal last year over similar concerns.
Illumina is appealing both orders and expects final decisions in late 2023 or early 2024.
The company has repeatedly defended the acquisition of Grail.
DeSouza told CNBC last month that the deal “makes sense” because Illumina could significantly expand the market for Grail’s early screening testwhich can detect more than 50 types of cancer through a single blood draw.
The CEO also praised Grail’s 100% revenue growth in the first quarter compared to the same period a year ago.
In 2022, Grail generated approximately $55 million in revenue. Illumina expects to earn up to $110 million this year.
Icahn ran into his own criticism during the proxy battle.
Notable short-seller Hindenburg Research accused Icahn Enterprises of being overvalued, comparing it to “Ponzi-like economic structures”.
Icahn Enterprises has called those claims “misleading and selfish.”
— CNBC’s Spencer Kimball contributed to this report.