Carl Icahn claims Illumina directors sought extra insurance for Grail deal
Neilson Barnard

Update: 9:28 AM EST: Adds Carl Icahn's remarks from his open letter to Illumina investors.
Activist investor Carl Icahn says that the directors of Illumina (NASDAQ:ILMN) demanded extra personal liability insurance before they agreed to close the company's ~$7B acquisition of cancer test developer GRAIL despite antitrust concerns.
In August 2021, the gene sequencing company announced the acquisition, while the deal, first announced in 2020, was under the review of U.S. and EU regulators.
In December, the European Commission ordered Illumina (ILMN) to divest GRAIL after the EU vetoed the transaction on antitrust grounds and concerns about its impact on innovation.
Icahn, who has started a proxy battle against Illumina (ILMN) over the company's decision to close the GRAIL deal despite regulatory concerns, has leveled his latest allegations in a letter to shareholders.
When ILMN directors opted to close the deal despite unresolved antitrust issues, "they portrayed themselves publicly as heroes, stating: "The deal will save lives," Icahn wrote.
"However, it seems that, in private, the directors were terrified that their decision might cause them enormous personal harm," he added, referring to their demand to seek additional personal liability protection.
Disclosure about purchasing additional insurance for directors was "buried in the hope no one would notice," Icahn argues, noting that the company only announced it months later in a routine SEC filing.
"This smells strongly to us like a quid pro quo â a group of trepidatious directors were dragged reluctantly, kicking and screaming, by management into an extremely risky deal and ultimately conditioned their approval upon receiving an even thicker blanket of immunity than the extremely luxuriant comforter which they already possessed," Icahn said.
Illumina (ILMN) rejected the claims about intentions to obtain insurance and its history of disclosures.
"Illumina operates transparently with strong corporate governance. Nothing was hidden, and unsurprisingly, Carl Icahn is deliberately mischaracterizing appropriate risk management and normal SEC disclosure practices," the company said Thursday.
Meanwhile, citing legal experts, the FT said that it was not uncommon for an acquiring company to raise insurance limits, and there is no requirement to disclose those details.
"What seems odd to me now is that Illumina disclosed the Insurance Matters Agreement a few months later in an SEC filing," attorney Kevin Lacroix, who is an executive vice-president at RT ProExec, a unit of insurance broker RT Specialty, said.
Read: Seeking Alpha analyst BlackNote Investment issued a Sell rating on Illumina (ILMN) last week, citing valuation concerns.