Carl Icahn claims Illumina directors got extra insurance to close $7.1 billion Grail deal

Carl Icahn connected Friday alleged that Illumina's directors demanded other idiosyncratic liability security earlier the biotech institution signed disconnected connected a $7.1 cardinal acquisition of crab trial developer Grail successful 2021. 

The assertion is the latest improvement successful a brewing proxy fight betwixt the activistic capitalist and San Diego-based Illumina, who person been trading jabs implicit the Grail woody that faces scrutiny from European antitrust regulators. Icahn, who owns a 1.4% involvement successful Illumina, is pushing for committee seats astatine the DNA sequencing company. The capitalist besides is calling for Illumina to unwind what helium calls a "disastrous" acquisition that helium believes represents "a caller debased successful firm governance." 

In a caller missive to Illumina shareholders, Icahn claimed that the company's directors required that it perpetrate to providing them with an "unprecedented level of further idiosyncratic liability insurance" extortion a time earlier the Grail deal closed connected Aug. 18, 2021. 

"It seems that, successful private, the directors were terrified that their determination mightiness origin them tremendous idiosyncratic harm," Icahn wrote.

He alleged that the acquisition of further security for directors was "buried successful the anticipation nary 1 would notice," adding that it was softly disclosed successful a regular filing to the Securities and Exchange Commission 3 months aft the Grail acquisition. 

He claimed the further security was a 4th furniture of liability extortion connected apical of benefits similar "extremely broad" directors and officers, oregon D&O, security sum paid by Illumina. That security offers liability sum for managers if they are personally sued by employees, vendors, investors oregon different parties for their actions successful managing a company. 

"This smells powerfully to america similar a quid pro quo – a radical of trepidatious directors were dragged reluctantly, kicking and screaming, by absorption into an highly risky woody and yet conditioned their support upon receiving an adjacent thicker broad of immunity than the highly luxuriant comforter which they already possessed," Icahn wrote. 

He besides alleged the Illumina committee decided not to archer shareholders astir different antagonistic accusation erstwhile they closed the Grail deal, specified arsenic however it could incur important taxation liabilities if Illumina is forced to unwind the acquisition. The committee lone admitted those imaginable taxation consequences successful Illumina's astir caller yearly study filed connected Feb. 17, helium noted. 

Illumina did not instantly remark connected Icahn's latest salvo Friday.

Illumina prevailed over the U.S. Federal Trade Commission's absorption to the Grail woody successful September, but is warring for European regulatory approval.

Last year, the EU's enforcement body, the European Commission, blocked Illumina's acquisition of Grail implicit concerns it would wounded user choice. At the time, it unveiled details of a planned bid that would unit Illumina to unwind the deal. That could effect in a good of up to 10% of Illumina's yearly revenue, which deed much than $4.5 cardinal past year.

Illumina has challenged the European Commission, arguing the bureau lacks jurisdiction to artifact the merger betwixt the 2 U.S. companies. A last determination is expected successful precocious 2023 oregon aboriginal 2024, the institution noted Monday. Illumina said winning a jurisdictional entreaty would destruct immoderate imaginable good and "gives the top optionality for Illumina to maximize worth for shareholders."

The institution connected Monday besides said it has interviewed Icahn's 3 nominees for its committee of directors and recovered they lacked applicable skills and experience. In his latest letter, Icahn reiterated his intentions to contiguous his committee nominees during the company's yearly gathering of shareholders.

"We consciousness powerfully that our 3 highly qualified nominees (none of whom has ever elected voluntarily to prosecute successful a worth destructive warfare with almighty antitrust regulators) are peculiarly suited due to the fact that of their acquisition to assistance support Illumina's directors from coating themselves further into a corner," helium wrote.

Icahn's proxy combat follows a rocky 18 months for Illumina. The company's marketplace headdress has shrunk to astir $34 cardinal from astir $75 cardinal successful August 2021, the period it closed the Grail deal. Icahn has antecedently contended that the acquisition wiped retired $50 cardinal successful Illumina's marketplace value, which helium said "clearly shows that shareholders person mislaid religion successful Illumina's absorption squad and committee of directors."

Illumina earlier this week touted Grail, which claims to connection the lone commercially available early screening test that tin observe much than 50 types of cancers done a azygous humor draw. The trial generated $55 cardinal successful gross successful 2022 and is slated to rake successful up to $110 cardinal this year, according to Illumina.

Grail is based successful Menlo Park, California.