UPDATE 1-Icahn wins legal fight over Forest Labs books
By Tom Hals
WILMINGTON, Del, July 27 (Reuters) - Billionaire investor Carl Icahn scored a court victory in his proxy fight with drugmaker Forest Laboratories Inc on Friday when he was granted access to some of the company's records.
Icahn has accused the maker of antidepressant drug Lexapro of mismanagement and is seeking court documents to aid in his fight to elect four members to the company's 10-member board at its Aug. 15 annual meeting.
Master Abigail LeGrow of Delaware's Court of Chancery ruled that Forest had to open its records relating to events such as the company's lowering of its earnings forecast in June.
LeGrow refused to order the company to open records relating to its plans for the eventual departure of 84-year-old Chief Executive Howard Solomon.
The parties will have 48 hours after a transcript of Friday's hearing is available to appeal to one of the court's judges.
Attorneys for both parties declined to comment after the hearing.
Forest, in a statement, said it was pleased the court did not grant Icahn the ability to receive "most of the remaining documents he sought." The company said it would comply with the rest of the court's ruling.
"We believe Mr. Icahn is engaging in an overly broad fishing expedition in an attempt to further this year's proxy contest after his overwhelming defeat at last year's annual meeting," Forest said.
Icahn, through funds he controls, sued the company in June seeking its records.
His legal team said he may share what he learns with other investors, and he might sue the board if he discovers that they have breached their duties to stockholders.
The case involves the right of a shareholder to demand books and records from a company to carry out an investigation, a hot topic in Delaware corporate law.
The law is still developing, and lawyers advising companies worry that if it becomes too friendly to shareholders it could throw open the doors to the boardroom and stifle debate among directors.
Lawyers for shareholders complain that conducting investigations can be expensive and time consuming, and while they are fighting for records another attorney might sue outside Delaware and seize control of the litigation.
The court's chief judge, Leo Strine, recently scolded public pension funds from California and New York for suing the board of Wal-Mart Stores Inc over an alleged bribery scandal in Mexico without first demanding company records.
The case is High River Limited Partnership et al v Forest Laboratories Inc, Delaware Court of Chancery, No. 7663.
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