TheChek News Flow

DAX:

MDAX:

SDAX:

Billionaire activist seeks three seats on biotech’s board

Carl Icahn is preparing a proxy fight at Illumina Inc., ILMN -4.24% arguing the biotechnology company cost its shareholders roughly $50 billion by plowing ahead with a risky acquisition despite opposition from regulators.

The billionaire activist plans to nominate three people to the San Diego company’s board, according to a letter Mr. Icahn plans to send to Illumina’s shareholders Monday that was viewed by The Wall Street Journal.

Mr. Icahn says in the letter that he tried to strike a deal with Illumina to avoid a proxy battle.

Once a biotech darling, Illumina was revered for its DNA-sequencing capabilities and was valued at more than $70 billion in summer 2021. But in recent months, its value has plummeted to around $30 billion as the company’s takeover of cancer-screening company Grail Inc. remains in limbo while the company also faces heightened competition from lower-cost rivals.

“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,” Mr. Icahn writes in the letter.

Illumina said it recommends its shareholders vote against Mr. Icahn’s nominees.

“Illumina has a diverse, experienced board comprised of directors who bring a range of perspectives to the company and represent the interests of its stockholders,” the company said in a statement.

Illumina in 2020 agreed to buy Grail, which develops blood tests for early cancer detection, and closed the deal in August 2021 despite facing antitrust resistance from both the Federal Trade Commission and European Union. Illumina at the time said that if it didn’t do so it could have missed a deadline for completing the deal.

The U.S. has since ruled in Illumina’s favor while the EU has sought to block the transaction. That has meant that Illumina has had to hold Grail as a separate unit.

Mr. Icahn in the letter accuses Illumina of overpaying for a business that made “exactly zero dollars in revenue,” then closing the deal despite not knowing if European regulators would bless it. He writes that holding on to Grail is costing Illumina $800 million annually, and that it faces a significant tax bill if ultimately forced to divest it.

He argues that his nominees— Vincent Intrieri, founder and CEO of an investment fund and two of Mr. Icahn’s deputies, Jesse Lynn and Andrew Teno —would bring experience dealing with crises to the board.

Illumina makes and sells genetic-sequencing machines and the chemicals they use, and its customers include Grail and Grail’s rivals. The company founded Grail and spun off a majority of the business in 2017. Illumina agreed to buy back the part it didn’t already own for $7.1 billion.

The European Union set out the details of a planned order requiring Illumina to unwind its deal for Grail last December. The commission had prohibited the deal earlier in the year over concerns that it would stifle innovation and hurt consumer choice.

Illumina has said it believes divesting itself of Grail isn’t “proportional to the speculative harm alleged by the Commission, especially given the benefits this merger will bring to patients in the E.U. and across the globe.”

Illumina appealed the European Commission’s decision last year and has said it would review strategic alternatives for Grail in case it isn’t able to delay an expected EU divestment order.

Mr. Icahn’s battle with Illumina comes amid a busy start to proxy season, as investors are emboldened by beaten-down prices. Dan Loeb’s Third Point LLC was planning to nominate directors at Bath & Body Works Inc. but recently stood down. Salesforce Inc. and Walt Disney Co. have also drawn big-name activists this year who threatened proxy fights.

Norwegian shipbuilding unit pivots from oil to renewables

Europe’s largest shipbuilder says a pivot from the oil industry to wind farms could more than double the revenue of its offshore business in the next five years, following the failure of its attempt to buy French rival Chantiers de l’Atlantique.

Pierroberto Folgiero, chief executive of Italy’s Fincantieri, told the Financial Times that its Vard offshore business in Norway could have revenues of up to €1.7bn by 2027, up from €700mn last year.

“Vard is our lever, our secret weapon. Renewable energy at sea is going to create a brand new economy. Vard is preparing itself for a renaissance in Norwegian shipbuilding,” he said during a visit to Norway.

Fincantieri’s current business is predominantly based on building cruise ships and naval vessels. They account for €4.2bn and €2.1bn respectively out of the group’s €7.5bn of revenues.

Folgiero is trying to revive its third pillar, the Vard offshore business, and hopes it can make €1bn-€1.1bn in revenues this year and €1.5bn-€1.7bn by 2027, as Norwegian companies that long supported the growth of the oil and gas industry turn to offshore wind.

Group revenues in 2027 should be close to €10bn, helped also by growth in naval as defence companies benefit from an increase in government spending after the Ukraine war, he said.

Vard is pushing into unmanned vessels and has already delivered the Birkeland autonomous container ship to Yara, a Norwegian fertiliser company. Folgiero said such vessels, as well as those powered by green fuels, would be vital for the offshore wind industry in the future.

“Working at sea a long time ago meant building an oil platform, now it means building a wind farm. The competences you need to build these specialised [construction] vessels are very similar. It’s not a big transition in concept. What is transformational is the innovation,” he added.

Vard earlier this month signed a deal to deliver four service vessels in 2025-26 to Edda Wind, a Norwegian offshore renewable energy company.

Fincantieri’s attempt to buy Chantiers de l’Atlantique collapsed in January amid antitrust concerns and the effect of the Covid-19 pandemic on the cruise ship industry.

Folgiero, who became chief executive in May, said an understanding on the long-mooted deal with former French president François Hollande changed under Emmanuel Macron.

“The transaction was somehow interrupted . . . Italian and French industrial co-operation is one of the most interesting chapters of the book,” Folgiero said.

Premier Li Qiang strikes conciliatory tone on benefits of close economic ties to US

Xi Jinping has pledged to strengthen China’s security and build the military into a “great wall of steel” to defend the country’s interests as relations with the west reach the lowest point in decades.

The Chinese president’s speech on Monday to the nearly 3,000 delegates of the National People’s Congress came at the close of the country’s annual rubber-stamp parliamentary session, during which Xi secured an unprecedented third term as president and appointed a close ally as his number two.

After thanking delegates for his unanimous re-election last week, Xi said he would “build the military into a great wall of steel that effectively safeguards national sovereignty, security and our development interests”.

He also pledged to better marry “development and security”, stating that “safety is the foundation of development, and stability is the prerequisite for prosperity”.

Xi’s focus on security comes as relations with the US have hit their lowest point in decades. China’s new foreign minister warned during the congress that Washington’s efforts to contain Beijing’s interests could drive the rival superpowers towards “conflict and confrontation”.

Tensions over Beijing’s claim to sovereignty over Taiwan, which the Chinese Communist party has never ruled but has threatened to subjugate by force, have also continued to rise. Xi said on Monday he would work to resolve the “Taiwan issue”, but said he “resolutely opposed external interference and Taiwan independence separatist activities”.

Newly appointed premier Li Qiang, Beijing’s number two, struck a more conciliatory tone in his first press conference, saying China and the US were closely intertwined economically to the benefit of both sides.

“Some have been trumpeting the idea of decoupling with China . . . but I wonder how many people can truly benefit from this hype,” Li said on Monday. “Encirclement and suppression are in no one’s interest.”

Li also sought to reassure China’s business community, which was hit hard by Covid-19 lockdowns last year, as well as defuse concerns about the administration backtracking to a state-led economy.

“Governments at all levels should make friends with entrepreneurs, build a friendly business environment and care about private entrepreneurs,” he said.

The premier admitted that with business still finding its footing, even hitting the country’s 5 per cent economic growth target for the year would “not be an easy task” and “require redoubled efforts”.

“Emphasis will be placed on ensuring stable growth, stable prices and stable jobs,” Li said.

The roughly week-long meetings in Beijing close on Monday after Xi pushed through extensive reforms to the country’s financial regulatory system.

But facing mounting geopolitical friction and an unresolved property crisis at home, Xi defied some expectations and opted for continuity among his top financial regulators. He retained central bank governor Yi Gang and kept the finance and commerce ministers unchanged.

He also bolstered the science and technology ministry to drive research advancements and compete with the west in pursuit of “self-reliance and strength in science and technology”, he said.

“With the founding of the Communist Party of China . . . and after a century of struggle, our national humiliation has been erased, and the Chinese people have become the masters of their own destiny,” Xi told delegates. “The Chinese nation’s great revival is on an irreversible path.”