In a significant turn of events, Illumina (ILMN:NSD), the world’s largest gene sequencing company, encountered shareholder dissent during its annual shareholder meeting. Shareholders expressed their disapproval of the company’s actions by voting to remove Chairman John Thompson and electing activist investor Carl Icahn’s nominee, Andrew Teno. This outcome marks a groundbreaking victory for activism at a company of Illumina’s magnitude. The repercussions were immediately felt, as ILMN stock plummeted to its lowest point since 2023, closing the day with a nearly 9% decline.
While the shareholders supported Icahn’s nominee for the board, they withheld their votes for the other two Icahn nominees, resulting in the re-election of Illumina’s current CEO, Francis DeSouza, and director Robert Epstein. The appointment of a new board chairman will be determined at a later date. Additionally, shareholders voted against the company’s 2022 compensation packages, which included a total pay package of $26.7 million for DeSouza.
The conflict between Carl Icahn and Illumina has been a long-standing proxy battle, with the core issue revolving around Illumina’s acquisition of Grail in 2021 without the approval of the European Union and U.S. regulators. The recent shareholder votes clearly indicate their dissatisfaction with the company’s actions and raise the prospect of further changes if Illumina does not promptly address the concerns.
In response to the votes, Illumina released a statement stating, “We appreciate the constructive shareholder feedback throughout this process and are committed to delivering on our plan to accelerate shareholder value creation.”
It is worth noting that Illumina has faced regulatory hurdles related to its Grail acquisition. In April 2023, the U.S. Federal Trade Commission (FTC) ordered Illumina to reverse its $7 billion acquisition due to antitrust concerns. Additionally, in December 2022, the European Union ordered Illumina to divest Grail or face a penalty of $453 million. Illumina is currently challenging both the FTC and EU orders in court.
Should You Buy ILMN Stock?
As a leader in DNA sequencing, Illumina holds promising prospects. On TipRanks, the stock holds a Moderate Buy consensus rating, based on six Buy, four Hold, and two Sell ratings. Furthermore, the average price target for ILMN stock is $242.50, indicating a potential upside of 25.3% from current levels. However, it is important to note that ILMN stock has experienced a 3.7% decline so far this year.
As Illumina faces the ramifications of shareholder discontent and ongoing legal battles, the company is compelled to navigate these challenges while striving to deliver value to its shareholders. The outcome of this power struggle will undoubtedly shape the future direction of the gene sequencing giant.
