Motorola appeases Icahn, avoids proxy battle: Indian firm explores purchase

Motorola Inc. said today it had seated an ally of investor Carl Icahn on its board and nominated another Icahn ally for election at the company’s annual shareholder meeting May 5.
The ailing handset company also said it would consult with Icahn on the selection of a CEO for its devices business and how that business may be structured, creating two publicly traded companies. The company also agreed to allow Icahn’s two allies – now virtually assured of seats on the 13-member board – to brief Icahn on board discussions.
In exchange, Icahn agreed to drop any current litigation against the company, to not solicit proxies and to vote his 145 million shares in support of Motorola’s nominees.
Icahn had sought four seats on the board, including one for Keith Meister, managing director of Icahn’s investment funds and principal executive officer of Icahn Enterprises, who has just been seated on the board and who will also appear on the proxy statement for election on May 5. Motorola earlier had rejected Icahn’s suggestion that Meister join the board, saying the company was not familiar with him.
William Hambrecht, CEO and chairman of WR Hambrecht + Co., another Icahn ally, will be nominated for election to the board.
“We are pleased to avoid a costly and distracting proxy contest,” said Motorola’s CEO Greg Brown, in a statement.
Icahn said the agreement was “a positive step,” in that shareholder representatives would have “strong input” into the company’s future.
Meanwhile, Videocon Group, India’s largest consumer electronics maker according to Bloomberg News, has informed Motorola of its interest in buying the latter’s handset business. Videocon’s chairman, Venugopal Dhoot, told Bloomberg News that his company has retained investment bank UBS to advise it on its bid. Merril Lynch & Co. has estimated Motorola’s handset business’ value at $3.8 billion. Videocon is beginning network operations this year, according to Bloomberg.
Last Thursday, Motorola announced 2,600 job cuts on top of 3,500 jobs cut last June.