According to a Wall Street Journal report, Carl Icahn is preparing for a proxy fight at Illumina (NASDAQ:ILMN). The billionaire activist investor is seeking three seats on the biotechnology company’s board.
According to the report, Icahn argues that Illumina’s risky acquisition of Grail has cost its shareholders nearly $50 billion. Notably, the company announced the acquisition of Grail, a company developing blood tests for the early detection of cancer, in 2020. However, legal troubles surrounding the deal have weighed on ILMN stock in the past year. It has dropped over 40% in one year, underperforming the broader market averages.
Further, Mr. Icahn said that the company overpaid for the acquisition of Grail, which has roughly no revenue. Moreover, he noted that the Grail acquisition costs the company about $800 million annually. It is significant to note that the European Commission has prohibited ILMN’s acquisition of GRAIL under the EU merger regulation.
Mr. Icahn tried to strike a deal with the company to avoid the proxy war by seeking three board seats. In response, the company responded that it has a diverse and experienced board to represent the interests of its shareholders.
Whether Mr. Icahn succeeds in nominating three directors to ILMN’s board remains a wait-and-watch story. Meanwhile, let’s check what Wall Street recommends for ILMN stock.
Is ILMN a Buy or Sell?
Given the concerns around the Grail acquisition and near-term pressure on revenues due to seasonality, analysts remain sidelined on ILMN stock. It has received seven Buy, six Hold, and three Sell recommendations for a Hold consensus rating.
Further, analysts’ average price target of $240.29 implies 23.85% upside potential from current levels.