Carl Icahn sues Illumina and its board over Grail deal fallout

Earlier this year, billionaire Carl Icahn’s proxy battle against Illumina led to the replacement of its board chairman and the resignation of its CEO. Now, the activist investor is going after the rest of the company’s board, with a class-action suit claiming they broke the law when they voted to direct the DNA sequencing giant to move forward with its takeover of Grail.

The $8 billion deal was closed in August 2021 over the objections of government competition watchdogs in the U.S. and Europe and before they could fully complete their antitrust reviews. In the time since, both the Federal Trade Commission and, more recently, the European Commission’s regulators have directed Illumina to unwind its ownership of the cancer blood test developer—while the commission has gone so far as to levy a record-breaking $476 million fine against the company for jumping the gun. Illumina has appealed these decisions and is currently looking to prove it can hold onto Grail in courts on both sides of the Atlantic.

Icahn’s complaint, filed in Delaware court and made public late last week, claims that Illumina’s “obsessive quest” for Grail has caused “billions of dollars in harm” to the company and its stockholders, with Illumina’s share price dropping about 70% since it completed the acquisition.

The suit calls for the remainder of Illumina’s board of directors to be removed for not acting in the best interests of the company’s stockholders, naming Nobel Prize winner Frances Arnold, former FDA Commissioner Scott Gottlieb, M.D., and Intuitive Surgical CEO Gary Guthart as defendants—as well as former CEO Francis deSouza and ex-board chair John Thompson—among others. 

Icahn is seeking the payment of financial damages, with figures equivalent to Illumina’s tallies: Namely, at least $476 million in recompense for the European Commission’s regulatory fine and an amount linked to the cost of Illumina’s ongoing support for Grail’s business—which the suit has estimated at more than $700 million per year. Illumina has been managing Grail at arm’s length since the acquisition but has been on the hook for its operating costs. 

The suit also asks for sums equal to the expenses associated with Illumina’s eventual divestment of Grail and the amounts the company has spent on legal fees through its appeals.

In addition, the partially redacted complaint calls for Illumina’s board to disclose “all material facts” regarding its decision to close the Grail acquisition and any financial interests the members may have in the company.