Carl Icahn speaks at Delivering Alpha in New York on September 13, 2016.
David A Grogan | CNBC
That’s what Carl Icahn said on Wednesday Enlightenment is set to bring back its former CEO “immediately,” his latest move in a looming proxy fight with the biotech company.
Icahn said in an interview with the Wall Street Journal that former top executive Jay Flatley “obviously knows the DNA sequencing company and has done a good job with it.” The activist investor did not say whether he was in contact with Flatley.
Flatley led the company for 17 years before being succeeded by current CEO Francis deSouza in 2016. San Diego-based Illumina credits Flatley with the company’s rapid growth over the past two decades, noting that he took the company from $1.3 million in sales in 2000 to $2.2 billion in annual sales Year 2015. Flatley served as CEO of Illumina until 2021 and later as CEO.
Illumina shares are down nearly 4% as of Wednesday morning.
Icahn, who owns a 1.4% stake in Illumina, criticized the company’s current management in the interview. He told the Journal that executives are making the mistake of holding on to Illumina’s $7.1 billion acquisition of cancer test developer Grail in 2021.
Icahn has urged Illumina to reverse the “catastrophic” deal that he claims wiped out $50 billion in market value for the company. He told the journal that Illumina cannot afford to hold Grail in the current macroeconomic conditions.
“They don’t have the money, and especially in this environment, they won’t be able to continue funding this loss-making business,” he said. “I hate to say this, but this company will go downhill like the Eastman Kodaks of the world unless they get rid of Grail and focus on their core business.” Icahn was referring to a photography pioneer who went bankrupt in 2012.
“This is an urgent moment for the company and they need someone who knows what they are doing to remedy the situation,” he told the Journal.
Jay Flatley, acting CEO of Zymergen
Markus Neuling | CNBC
Part of Icahn’s opposition stems from Illumina’s decision to complete the Grail deal without antitrust approval. Illumina won the deal over opposition from the US Federal Trade Commission in September, but is still fighting for approval from the EU’s executive body, the European Commission.
The European Commission blocked Illumina’s acquisition of Grail last year, fearing it would stifle innovation and hamper consumer choice. The commission also revealed details of a proposed order that would force Illumina to reverse the deal.
In the interview, Icahn said the best way to liquidate Grail is through a rights offering, where Illumina shareholders can choose whether or not to invest in Grail.
“The best thing about a rights offering is that you find a way to fund Grail without adding debt to Illumina,” he told the Journal. “It’s a way of allowing Illumina shareholders to buy Grail at a potentially bargain price or sell their rights and gain an advantage.”
Illumina and Icahn did not immediately respond to a request for comment.