The Departure of Illumina CEO Francis deSouza Amid Shareholder Battle with Carl Icahn
Illumina, the world’s largest gene sequencing company, has accepted the immediate resignation of CEO Francis deSouza amid a proxy battle with activist investor Carl Icahn. The resignation follows the departure of Illumina chairman John Thompson, who was ousted last month in a shareholder vote after a proxy campaign by Icahn, who holds a 1.4% stake in Illumina.
Background on the Battle
Icahn has campaigned against Illumina’s decision to acquire grail, a cancer test developer, for $8 billion in 2021 without the clearance of EU and US antitrust regulators. He has accused deSouza of engineering the takeover and allowing Illumina’s core business to deteriorate. He also claimed that most of Illumina’s directors were hand-picked by deSouza, a claim the company has denied.
DeSouza’s Leadership Vote
DeSouza survived the leadership vote on May 25, receiving 71% shareholder support. However, the proxy battle weakened his position, and last week negotiations with the company began about his exit. Illumina has denied that there is any settlement associated with deSouza’s resignation.
Illumina’s Market Value
Illumina’s market cap has plunged from $75 billion in August 2021, when it bought grail, to less than $32 billion as of Friday. The company faces increasing competition from several new entrants and Chinese gene sequencing company MGI.
DeSouza’s Resignation
In a letter to Illumina employees, deSouza said his decision to leave was “extremely difficult,” but he felt a sense of “satisfaction and pride in where we’ve taken the company,” including the acquisition of grail. He wrote, “My belief in the potential of grail’s potentially life-saving technology and the benefits of merging with Illumina remains unshakable.”
Illumina’s Future
The departure of deSouza, who is also a director of Disney, comes at a critical time for Illumina, which recently launched a new generation of gene sequencing machines, called the NovaSeq X. Many shareholders are skeptical of Illumina’s determination to keep grail and want the board to negotiate a deal with EU authorities to spin off the cancer diagnostics company.
Additional Piece: Impacts of the CEO Resignation on Illumina and Gene Sequencing Industry
Illumina has been a dominant player in the gene sequencing industry for many years, with a technology called “short-read sequencing” that has reduced the cost and time for genetic testing. However, the industry has been rapidly evolving, and new technologies such as “long-read sequencing” and “optical mapping” are challenging Illumina’s market position. Some of the impacts of the CEO resignation on Illumina and the gene sequencing industry include:
– Turmoil and Uncertainty: Any sudden changes at the top of a company can create turmoil and uncertainty, especially when combined with a shareholder battle and plunging market value. Illumina will need to reassure both its employees and customers that it remains committed to its mission and values, despite the leadership changes.
– Leadership Succession: Illumina’s board will need to find a new CEO who can both harness the company’s strengths and navigate its challenges. The new CEO will need to be an experienced industry expert who understands the science, technology, and regulatory landscape of gene sequencing.
– Innovation and Investment: Illumina will need to continue to innovate and invest in order to maintain its market position in the face of increasing competition. This will require significant R&D spending, as well as strategic partnerships and acquisitions. Illumina may also need to explore new business models and revenue streams beyond gene sequencing.
– Regulatory Scrutiny: Illumina’s acquisition of grail has already faced significant regulatory scrutiny from both the EU and the US. As Illumina moves forward with its plans for grail, it will need to carefully navigate the regulatory landscape and ensure that its business practices are in compliance with antitrust and data privacy laws.
– Industry Consolidation: The gene sequencing industry is experiencing significant consolidation, with large companies such as Thermo Fisher Scientific and Qiagen acquiring smaller players in order to expand their market reach. Illumina may face pressure to pursue similar acquisition strategies in order to stay competitive.
Summary:
Illumina’s CEO, Francis deSouza, has resigned and will be replaced by Charles Dadswell as interim CEO amid a shareholder battle led by activist investor Carl Icahn. The departure of deSouza, who also served as director at Disney, comes at a critical time for Illumina, as the company faces increasing competition from new entrants and plunging market value. Illumina’s board will need to find a new CEO who can both harness the company’s strengths and navigate its challenges. In order to maintain its market position, Illumina will need to continue to innovate, invest, and carefully navigate the regulatory landscape.
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Illumina CEO Francis deSouza has resigned following a tense proxy battle with activist investor Carl Icahn over the future of the world’s largest gene sequencing company.
Illumina said Sunday that the company’s board has accepted deSouza’s immediate resignation and has begun the search for a replacement. DeSouza will remain as a consultant at Illumina through July 31, the company said.
Illumina said Charles Dadswell, the company’s senior vice president and general counsel, has been named interim chief executive officer.
The resignation of deSouza, who was named chief executive officer in 2016, follows the departure last month of Illumina chairman John Thompson, who was ousted in a shareholder vote following a proxy campaign by Icahn.
The 87-year-old activist investor has spearheaded a shareholder campaign centered on Illumina’s ‘reckless decision’ to close $8 billion takeover of cancer test developer grail in 2021 against the will of EU and US antitrust regulators.
Icahn, who holds a 1.4% stake in Illumina, said it was “inexplicable and inexcusable” that the Thompson-led board went ahead with the deal without ascertaining whether it would get clearance from Illumina regulators. ‘EU.
Icahn had called on the Illumina board to fire deSouza, saying he engineered a “Hail Mary” takeover by acquiring Grail and allowing the core business to deteriorate. He also claimed that most of Illumina’s directors were hand-picked by deSouza, a claim the company has denied.
DeSouza survived the leadership vote on May 25, receiving 71% shareholder support. But the proxy battle has weakened his position, and last week it began negotiations with the company about exiting him, according to sources familiar with the talks.
Illumina said there is no settlement associated with the resignation.
Grail acquisition has absorbed It illuminates years of legal battles with antitrust regulators in Brussels and Washington at a time when its core business is under pressure from new entrants in gene sequencing.
In December, Brussels ordered Illumina to divest Grail and plans to issue a fine of up to $453 million for “jumping with a gun.”
The US Federal Trade Commission also ordered Illumina to divest Grail. Illumina is appealing the orders from EU and US regulators. Icahn also said that the board lacked independence and that most of the directors were handpicked by deSouza.
Illumina’s market cap plunged from $75 billion in August 2021, when it bought Grail, to less than $32 billion as of Friday.
In a letter to Illumina employees posted on LinkedIn, deSouza said his decision to leave was “extremely difficult,” but he felt a sense of “satisfaction and pride in where we’ve taken the company,” including the acquisition of Grail.
“My belief in the potential of Grail’s potentially life-saving technology and the benefits of merging with Illumina remains unshakable,” he wrote.
But many shareholders are skeptical of Illumina’s determination to keep Grail and want the board to negotiate a deal with EU authorities to spin off the cancer diagnostics company.
The departure of deSouza, who is also a director of Disney, comes at a critical time for Illumina, which recently launched a new generation of gene sequencing machines, called the NovaSeq X.
The company faces increasing competition from several new entrants and Chinese gene sequencing company MGI.
https://www.ft.com/content/1ea8f392-273b-4ac6-a58d-2e979112f48b
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