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Activist investor Carl Icahn gained enough support on Thursday Illumina Shareholders are demanding the CEO of the biotech company.
Shareholders bid farewell to Chairman John Thompson. An Illumina spokesman said a new chairman would be elected in the next few weeks.
Icahn had urged shareholders to vote the company’s CEO, Francis deSouza, and Thompson out of the nine-member board of directors. DeSouza survived the proxy fight.
Shareholders also voted to appoint one of Icahn’s three director nominees: Andrew Teno, a portfolio manager at Icahn Capital LP, a company where Icahn manages mutual 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 years of service and said his leadership and business experience is greatly appreciated.
Earlier this month, voting rights advisory firm Institutional Shareholder Services recommended that Illumina shareholders support Teno.
Icahn, who owns a 1.4% stake in San Diego-based Illumina, had proposed two other director candidates who are either his current or former employees.
The vote comes as a blow to Illumina, which has claimed Icahn’s three nominees lack “relevant skills and experience” and would “threaten the progress” of the biotech’s core DNA sequencing business.
Battle to acquire the Grail
Icahn has accused Illumina’s management and board of poor oversight, particularly in light of the company’s $7.1 billion acquisition of cancer test maker Grail in 2021.
He urged the company to scrap the “absurd and questionable” deal and oust deSouza “immediately.”
Icahn has criticized the executive for getting a massive raise despite a sharp drop in the company’s market value.
Illumina’s market cap has fallen to about $33 billion from about $75 billion in August 2021, the month the Grail acquisition closed.
Much of Icahn’s opposition to the deal stems from Illumina’s decision to complete it without the approval of antitrust authorities in the US and Europe.
The Federal Trade Commission in April ordered Illumina to divest itself of the acquisition over concerns it would stifle competition and innovation.
The FTC’s decision overturns a September administrative judge’s decision that dismissed the agency’s original 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 its acquisition of Grail.
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DeSouza told CNBC last month that the deal “makes sense” because Illumina could significantly expand the market for Grail’s screening test, which can detect more than 50 types of cancer from a single blood draw.
The CEO also cited Grail’s 100 percent revenue growth in the first quarter compared to the same period last year.
In 2022, Grail generated sales of approximately $55 million. Illumina expects to make as much as $110 million this year.
Icahn encountered his own criticism during the proxy dispute.
Noted short seller Hindenburg Research accused Icahn Enterprises of being overvalued and likening the company to “Ponzi-like economies.”
Icahn Enterprises called these claims “misleading and self-serving.”
– CNBC’s Spencer Kimball contributed to this report.