Illumina CEO deSouza resigns after battle with Icahn

A sign at the front entrance to the global headquarters of Illumina is pictured in San Diego, CaliforniaA sign at the front entrance to the global headquarters of Illumina is pictured in San Diego, California, U.S., November 28, 2022. REUTERS/Mike Blake

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June 11 (Reuters) – Illumina (ILMN.O) CEO Francis deSouza stepped down on Sunday, the gene-sequencing machine maker said in a statement, ending a battle with activist investor Carl Icahn in which the company's chairman left the company earlier this year.

Illumina said it named Senior Vice President and General Counsel Charles Dadswell as interim CEO. DeSouza will stay on in an advisory capacity until July 31, it said.

Icahn had sought to remove deSouza as an integral part of his push to force the company to unravel its $7.1 billion acquisition of cancer diagnostic test maker Grail (GRAL.O).

U.S. and European antitrust regulators have ordered the company to unwind the deal but Illumina has gone to court in both regions to fight the move.

Analysts said they expect the company's shares to trade up on Monday morning after deSouza's resignation.

The Grail deal "has kept a lot of investors out of the stock" TD Cowen analyst Dan Brennan said. "With Francis now stepping aside, I think the certainty of a Grail exit definitely goes up."

The company's shares have lost about 60% of their value since completing the Grail deal in 2021. Illumina shares closed at $200.53 on the Nasdaq on Friday.

Icahn in a tweet said he is happy with the recent changes at Illumina and considers them a "very positive occurrence."

"The new additions to the board, the CEO transition, as well as the change of the Chairman, are significant positives that should drive value for all stakeholders and human health," he added.

The proxy battle began in March and ended with a May vote in which Icahn won enough shareholder support to oust the board chair, John Thompson, and install his nominee, Andrew Teno. Icahn has said he wants former Illumina CEO Jay Flatley to return.

DeSouza in a letter to employees on LinkedIn said, "My belief in the potential of GRAIL’s potentially life-saving technology and the benefits of merging it with Illumina remains unshakeable."

DeSouza's departure was not a foregone conclusion. He had secured more than twice the number of shareholder votes than his challenger received in the proxy vote, which could have given him enough legitimacy to hang on.

Vicki Hollub, for instance, remains Occidental Petroleum's (OXY.N) CEO after the company cut a deal with Icahn over board seats in 2020 and after Icahn cashed out two years later.

Still, there is a history of CEOs leaving. Unilever Plc (ULVR.L) CEO Alan Jope announced plans to leave three months after hedge fund Trian Fund Management's Nelson Peltz joined the consumer giant's board last year.

Illumina earlier this month filed an appeal against an order from the U.S. Federal Trade Commission (FTC) that demanded it divest Grail on competition concerns.

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