FTC Grail Order Illumina invocation is ‘an nearly inconceivable battle’

Carl Icahn, Chairman of Icahn Enterprises Holdings

Scott Eelis | Bloomberg | Getty Images

That’s what Carl Icahn said on Wednesday EnlightenmentEfforts by to appeal a Federal Trade Commission order to divest the highly controversial Grail acquisition “is a nearly impossible battle.”

Illumina told CNBC Monday that it intends to appeal the FTC’s order in federal court and seek an expedited decision. This objection will come with “high costs” for the DNA sequencing company, the activist investor argued in his recent open letter to shareholders.

“Our biggest concern as a major shareholder is that this multi-year struggle will consume copious amounts of cash and drag on for years, luxury Illumina doesn’t have,” wrote Icahn, who owns a 1.4% stake in Illumina.

The company’s market value has already fallen to about $36 billion from about $75 billion in August 2021, the month it completed its acquisition of cancer test developer Grail.

Icahn launched a proxy battle over the Grail deal last month, seeking seats on Illumina’s board of directors and urging the company to reverse the deal. He shares common ground with the FTC, which argued in its order that the $7.1 billion deal would stifle competition and innovation.

The FTC’s order overturns an administrative judge’s September ruling that dismissed the commission’s initial challenge to the Grail deal.

In his letter, Icahn highlighted Illumina’s “long history” of filing regulatory challenges for the acquisition.

The company appealed a similar order from EU regulators last year to scrap the Grail deal. The EU’s executive body, the European Commission, blocked the acquisition of Illumina in September over concerns it would hurt consumer choice and innovation.

San Diego-based Illumina expects a decision on its appeal against the European Commission and FTC orders in late 2023 or early 2024.

The company said in a statement to CNBC on Wednesday that it had “strong grounds for appeal” against the FTC’s order. It pointed to how it had prevailed over the Commission last year.

Illumina also pushed back the last order.

“The FTC’s decision breaks precedent and goes against the overwhelming evidence that Illumina and GRAIL reunification will promote competition and save lives,” Illumina told CNBC.

Illumina shares ended relatively unchanged on Wednesday afternoon.

More beatings on the Illumina CEO

Icahn fired more shots at Illumina CEO Francis deSouza on Wednesday after criticizing the executive — and his raise — last week.

The investor claimed deSouza “allowed our potentially great company to deteriorate.

“His shareholder-funded GRAIL adventure is a desperate ‘Hail Mary’ power grab to try and reverse Illumina’s demise,” Icahn wrote.

He added that the Grail deal is deSouza’s “second major M&A failure” since he took over as CEO in 2016. In 2020, Illumina canceled a $1.2 billion merger with Pacific Biosciences of California after the FTC challenged the acquisition.

Icahn reiterated his call for Illumina to replace deSouza with the company’s former CEO, Jay Flatley, or “someone else at his level.”

Last week, Icahn said the company needs “someone who knows what they’re doing to fix the situation.”

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