Illumina urges shareholders to reject Carl Icahn's board nominees as proxy fight heats up

Illumina on Thursday urged shareholders to reject Carl Icahn's three board nominees at this year's annual meeting, saying they would "threaten the progress" of the biotech company's core business. 

"Carl Icahn's involvement with Illumina risks the long-term success of the Company, and his director nominees bring no relevant skills to the Board of Directors," San Diego-based Illumina said in a preliminary proxy statement filing. 

The DNA-sequencing company told shareholders to discard any proxy card sent by the activist investor or his affiliate entities. Illumina also urged shareholders to vote in favor of its proposed board of directors, noting that it would mail its definitive proxy materials soon.

The company has not announced the date of its annual shareholder meeting, where Icahn intends to present his nominees for election.

Illumina said it will provide more information about "the strength of our Board and management team, our strategy to deliver shareholder value — with innovation at its core — and the potential for Mr. Icahn's associate nominees to damage that strategy."

Illumina's remarks are its latest move in a brewing proxy fight with Icahn, who owns a 1.4% stake in the company. Icahn is seeking board seats and pushing for Illumina to unwind its $7.1 billion acquisition of cancer-test developer Grail, which he previously said represents "a new low in corporate governance." 

Icahn, in a statement to CNBC, said, "I'd find it comical, if it wasn't so reprehensible that ILMN's share price is down 63% due to CEO Francis deSouza making such an absurd and questionable purchase."

"And what is really funny is the idea that it is hard to find good CEOs in this area," he added. "I guess it would be hard to find someone who could lose $50 billion of shareholder value in a matter of months yet still get paid 87% more for a grand total of $26.8 million in 2022."

DeSouza stepped in as Illumina's CEO in 2016. Icahn was referring to his total pay that nearly doubled last year despite a dramatic drop in Illumina's market value. The company's market cap has shrunk to around $35 billion from about $75 billion in August 2021, the month it closed the Grail deal.

Icahn on Wednesday said Illumina should bring back its former CEO, Jay Flatley, to immediately "fix the situation."

On Thursday, Illumina said Icahn had previously said more favorable things about deSouza. The company said Icahn was "supportive" of deSouza's actions as CEO during a meeting earlier this month, but noted he would not repeat those comments publicly.

Illumina emphasized Icahn isn't a long-term shareholder and did not engage with the company before demanding board representation. The company noted it "moved quickly and deliberately" to meet with Icahn, interview his nominees in good faith and explore potential alternatives to a proxy fight. 

But Icahn was "unwilling to compromise" and insisted that the board add his three nominees without input from shareholders, Illumina said. The company also alleged that Icahn said he wanted his nominees on the board because they aren't independent and he can directly control them.

"My guys answer to me," Icahn said about his nominees, according to Illumina.

The company said Icahn's choices had no relevant health-care or genomics expertise on paper. After interviewing the nominees, Illumina concluded they also lacked any "original perspective or detail" on how they would like to see the company operate differently. 

"Each candidate instead recited the same poorly researched and non-actionable ideas with respect to GRAIL," Illumina said.

The company added that "it has become abundantly clear that neither Mr. Icahn, nor his three associate nominees — Jesse Lynn, Andrew Teno, or Vincent Intrieri — understand Illumina's business or GRAIL and the associated regulatory processes."

Intrieri, founder and CEO of VDA Capital Management, was previously employed by Icahn. Lynn is general counsel of Icahn Enterprises and Teno is a portfolio manager at Icahn Capital LP, an entity where Icahn manages investment funds.

Illumina said its board had identified two independent candidates and offered to have Icahn meet with them. But Icahn refused and said he "would not even support Jesus Christ" as an independent candidate over his own nominees, Illumina said.

Illumina shares rose 1.5% on Thursday.