- Activist Carl Icahn takes 1.4% Illumina stake
- Shares jump 17% after falling 57% over two years
- Pfizer acquires Seagen for $43 billion
US gene sequencing giant Illumina (ILMN:NASDAQ) saw its shares jump 17% overnight after activist investor Carl Icahn revealed a 1.4% stake and launched a proxy fight to gain board seats.
According to the Wall Street Journal Icahn said: ‘We are convinced that at least three shareholder representatives are needed on Illumina's board to attempt to put an end to this insanity now before the reckless decision making escalates into a no-return situation.’
Illumina’s shares have lost around 57% of their value since announcing the acquisition of cancer screening and monitoring company Grail in August 2021.
WHY IS ICAHN FIGHTING FOR BOARD SEATS?
The investor has criticised illumina’s $7 billion acquisition of Grail which was made without prior approvals from US and European antitrust regulators.
In December 2022 the European Union ordered Illumina to unwind the deal three months after opposing the acquisition on grounds it could damage consumer choice.
Icahn argues the company could lose $800 million in annual operating expenses if the deal is not unwound.
The proxy fight comes after weeks of discussions between Icahn and Illumina’s board over nominee candidates. Illumina claims the proposed candidates lacked ‘relevant skills and experience’ according to a Reuters report.
In a statement Illumina said, ‘Icahn was explicit and unyielding in his demand that any resolution should give him outsized influence and control.’
The scene is set for one of the highest profile proxy contests this year after Nelson Peltz ended his fight for board seats at Disney (DIS:NYSE).
PFIZER ACQUIRES SEAGEM FOR $43 BILLION
In other healthcare news, drug developer Pfizer (PFE:NYSE) is to buy Seagen (SGEN:NASDAQ) in a $42 billion deal. The price represents a rough 45% premium to pre-acquisition rumours, according to Berenberg.
Berenberg said the deal goes some way in filling the patent hole: ‘Combining our Pfizer sales forecasts with those of our Seagen analyst, Zhiqiang Shu, we conclude the proposed acquisition goes a significant way towards offsetting Pfizer's sizeable patent expiry burden in the second half of the decade.’
‘Following a series of bolt-on acquisitions through 2022, investors had been awaiting a larger-scale deal from Pfizer and, given recent rumours, will not be wholly surprised to see this deal on the table, added Berenberg.
Seagen is the largest holding in the International Biotechnology Trust (IBT) portfolio. Co-manager Ailsa Craig commented: ‘Seagen is IBT’s largest shareholding, at 10.2% of its net asset value as at Friday 10 March 2023. IBT has now seen 20 M&A deals among its portfolio companies since 2020 - and five in the past six months.’
‘Many global pharma companies have built large cash stockpiles over recent years - especially those making profits from the sale of Covid-19 vaccines and treatments, such as Pfizer.
‘As these businesses start to deploy their cache of dry powder, we are looking at a fertile marketplace characterised by reasonably priced assets and cash-rich acquirors.’
