Illumina Shareholders Scream Conflict of Interest

Gene decoding company Illumina (NASDAQ:ILMN) has been hit with a class action suit by a group of shareholders charging its board had “inexplicably chosen to receive” conflicted advice from Goldman Sachs (NYSE:GS) when it adopted a poison pill strategy to rebuff Roche’s $5.7 billion bid for Illumina.

According to the lawsuit, the value of Illumina shares would have benefited from the sale to Roche. However, the deal could not go through because Goldman Sachs chose to advise against it – primarily because it would have lost hundreds of millions of dollars on a “complex derivative transaction between Illumina and Goldman Sachs”, had the deal materialized. Goldman Sachs therefore had a conflicted financial interest in advising Illumina to scuttle the deal via the poison pill. The lawsuit was filed Tuesday in Delaware Chancery Court.

Here’s how these stocks are reacting to the news:

Illumina Inc. (NASDAQ:ILMN): ILMN shares recently traded at $54.35, up $0.01, or 0.02%. They have traded in a 52-week range of $25.57 to $79.40. Volume today was 439,749 shares versus a 3-month average volume of 3,479,560 shares. The company’s trailing P/E is 87.58, while trailing earnings are $0.62 per share.

The Goldman Sachs Group, Inc. (NYSE:GS): GS shares recently traded at $114.64, up $1.77, or 1.57%. They have traded in a 52-week range of $84.27 to $169.90. Volume today was 2,561,694 shares versus a 3-month average volume of 7,383,070 shares. The company’s trailing P/E is 25.46, while trailing earnings are $4.51 per share.

To contact the reporter on this story: Alex Capel at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com