Icahn steps up pressure on Motorola
NEW YORK: Carl Icahn, the billionaire investor with a history of initiating hostile actions against companies, said Monday that he was suing Motorola to force it to hand over documents related to its money-losing mobile devices unit and determine if the board of the company had failed in its duties.
Icahn, the second-biggest shareholder in Motorola, is engaged in a proxy battle with the company and has proposed a slate of four directors to the board of the company, whose market share lags behind those of Nokia and Samsung Electronics.
Motorola had previously announced that it was looking at options including a separation of its mobile devices business, following pressure from Icahn.
The Icahn Group on Monday said it had filed a lawsuit in a Delaware court seeking documents related to Motorolas mobile devices business, including board discussions about a potential spinoff and the units performance.
“We demanded these materials for the purposes of enabling us to investigate whether and to what extent the board of directors of Motorola failed in their duties as directors,” Icahn said in a letter to Motorola shareholders.
Icahn also asked for documents, if there are any, showing use of Motorolas aircraft and property by senior management, the board of directors and their families. The investor also questioned whether Greg Brown, recently appointed as chief executive, was qualified for the job.
Icahn holds about 6.3 percent of Motorola.
Icahn promised to share the released information with Motorola stockholders, but added that Motorola had said it would not comply.
A Motorola spokeswoman, Jennifer Erickson, said the company had not yet received a copy of the lawsuit but would review it in due course.
Motorola, which has said it faces a challenging 2008, has been losing to rivals such as Nokia and Samsung in the last year amid criticism of its cell phone line-up and failure to produce a strong successor to the once-lauded Razr phone.
Charter Equity Research analyst Ed Snyder said that Icahn, who failed to win a Motorola board seat last year, was likely looking for information that would help him win shareholder support ahead of the annual meeting, set for May 5.
“Hes trying to wrest control of the company because he thinks his slate can do a better job than the current board, which is not a high bar,” said Snyder who expects shareholders to be more open to Icahn at this years director election.
