Icahn ratchets pressure on Motorola with lawsuit: Alleges improper use of Moto aircraft by execs

Activist investor Carl Icahn announced, through a fiery press release, that he is suing Motorola Inc. in order to obtain documents outlining the handset maker’s business strategy, financial performance and use of the company’s aircraft by Moto executives “for personal reasons,” according to Icahn.
“Motorola rejected Mr. Icahn’s demand for extensive access to its books and records, as the company’s [sic] does not believe that Mr. Icahn’s demand sets out a proper purpose to support a right of inspection under Delaware Law,” Motorola wrote in response to Icahn’s press release. “Motorola had offered Mr. Icahn access to information concerning Motorola pursuant to a customary confidentiality agreement but Mr. Icahn chose not to avail himself of that opportunity and instead seeks to create further unnecessary distraction.”
The lawsuit is the latest salvo in a protracted war between the investor and Motorola; Icahn is working to get his associates voted onto Motorola’s board during the company’s upcoming May election.
This is Icahn’s second attempt on Motorola; he lost a similar vote last May.
Icahn said his lawsuit is an attempt to discern whether Motorola’s executives have been forthcoming about the company’s mounting troubles.
“Over the past 12 months the statements and predictions of Motorola’s management and the board about Mobile Devices business have too often proven to be wrong. We want to ascertain what the board could have done in the exercise of its fiduciary duty to assure Motorola stockholders that Motorola’s statements and predictions were not incorrect and would not provide Motorola stockholders with an inaccurate perspective on the prospects for the Mobile Devices business,” Icahn said of the suit, filed in the Court of Chancery of the State of Delaware.
“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 in supervising management and setting policy and direction of Motorola. We intend to share with Motorola’s stockholders information obtained pursuant to the request as part of our proxy battle with Motorola. Motorola has responded that they will not comply with our demand,” he added.
Icahn’s latest attack comes at an inopportune time for the world’s No. 3 cellphone maker. Motorola executives have been ditching the company in droves, and the company’s stock continues its meteoric fall.
Interestingly, part of Icahn’s takeover plan involves spinning off Motorola’s handset business as a separate company with a separate chief executive. Motorola earlier this year announced it is considering just such a move.