Icahn scores partial Illumina win amid pressure to defend investment acumen

By Svea Herbst-Bayliss

NEW YORK (Reuters) -Carl Icahn secured a seat on Thursday for one of his three nominees to the board of gene sequencing machine maker Illumina Inc, a partial victory for the activist investor who is struggling to burnish his credentials following a shortseller attack on his company.

Illumina said Icahn nominee Andrew Teno won enough shareholder votes for election, confirming an earlier Reuters report. He will take the seat of board Chairman John Thompson, who failed to win reelection.

Illumina’s market value of $30 billion made the fight this year’s largest proxy contest to go to a shareholder vote. Its shares closed down 9% at $193.53 on Thursday after Icahn failed in his bid to change the company’s management by also ousting Chief Executive Francis deSouza from the board.

Icahn had accused Illumina of poor oversight, especially with regard to its $7.1 billion acquisition of cancer test maker Grail. Illumina completed the deal despite opposition from U.S. and European antitrust regulators, who are now trying to force the company to unwind it. Icahn argued that Illumina lost $50 billion in value following the deal because investors worry that the company will be forced to divest Grail at a big loss.

Icahn is battling to restore Wall Street’s confidence in his investment acumen. Shares of investment company Icahn Enterprises LP have lost 60% of their value since May 2, when a Hindenburg Research report accused it of artificially inflating its dividend yield and the value of its assets. Icahn has denied the claims.

Icahn Enterprises shares lost another 14% on Thursday, reaching their lowest level since 2004, after hedge fund veteran William Ackman tweeted more criticism about the company’s finances.

Icahn rejected an offer from Illumina earlier this year for a board seat for one of his nominees and another seat for an independent candidate that would have averted the proxy battle.

That arrangement would not necessarily have been the same as the outcome of the vote, given that it led to Thompson’s ouster.

“I look forward to serving on behalf of all shareholders and stakeholders. I am happy to say that activism is alive and well at Icahn,” Teno said in a statement.

The Illumina board battle was one of the first conducted under the U.S. Securities and Exchange Commission’s universal proxy rules, which came into force last August. The rules allow shareholders to pick and choose among board director nominees in opposing slates, as opposed to voting only for entire slates. Some companies lobbied against the changes, arguing it favored activist investors.

Illumina shareholders also voted against the pay arrangements of top executives in an another blow to the company. The vote was non-binding, but companies often take up such shareholder rulings. The CEO compensation package for deSouza reached $26.8 million in 2022, up from $14.3 million in 2021, according to a regulatory filing.

(Reporting by Svea Herbst-Bayliss in New York; Editing by Greg Roumeliotis and Bill Berkrot)

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