Illumina CEO stepped down after losing a proxy battle to activist investor Icahn
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Illumina recently saw a major shift in management after its CEO, Francis deSouza, announced that he was stepping down this Sunday. The move marks a victory for Carl Icahn, an activist investor, and it also heightened expectations that the company’s recent controversial acquisition of Grail could unwind.
The gene-sequencing machine maker repurchased a cancer diagnostic test maker Grail in 2021, despite the fact that both US and EU antitrust regulators opposed to this decision. However, deSouza decided to pursue the $7.1 billion deal, leading Icahn to pursue a proxy fight at Illumina. Icahn argued that it should be divested, as it ended up costing investors billions of dollars.
Following deSouza’s resignation, Illumina stated that its board accepted the now-former CEO’s decision to step down. As the company searches for a new CEO, it will be led by its senior VP and general counsel, Charles Dadswell. Dadswell will act as interim chief executive, while deSouza is expected to stay in an advisory capacity until the end of July.
What happens now?
Following deSouza’s resignation, analysts expected the company’s stock price to pick up. According to TD Cowen Analyst, Dan Brennan, the Grail deal kept many investors out of the company’s stock. Now that Francis is stepping down, he added that the certainty of a Grail exit has gone up.
So far, the firm has seen a 60% drop in shares value since the deal was initially completed in 2021. As for Icahn, he said that he is pleased with the recent changes at Illumina. He considers them a positive occurrence, including the CEO transition, new additions to the board, as well as the change of the Chairman are all positives. He believes that the changes will drive value for all stakeholders and human health
Icahn started the proxy battle back in March of this year, and it ended quite quickly, with a vote that took place in May. Icahn won snough shareholder support to replace the acting board chair during the vote. At the time, that was John Thompson, who was replaced by Icahn’s own nominee, Andrew Teno. Icahn added that he wanted Jay Flatley, the former CEO of Illumina, to return to the position once deSouza resigns.
While he recognized his loss and agreed to step down, deSouza claims that his belief in Grail’s potential to act as life-saving technology remains unshakeable. However, it is also worth noting that he managed to secure more than twice the number of shareholder votes than Icahn. This was enough to give him the legitimacy to hang onto his position. However, he still decided to leave the company, which already has a history of CEOs leaving.
