Icahn sues Motorola for access to documents

By Sinead Carew and Robert MacMillan

NEW YORK (Reuters) - Activist investor Carl Icahn said on Monday he is suing Motorola Inc to force it to hand over documents related to its money-losing mobile devices business to determine if its board failed in its duties.

The actions come after Icahn rejected an offer by Motorola to support two of his four board nominees, according to the Wall Street Journal Online, which cited an Icahn interview.

Icahn, Motorola's second-biggest shareholder, is engaged in a proxy battle with the company, proposing a slate of four directors to the board of the No. 3 phone maker, which has seen its market share plummet in the last year.

Motorola said it rejected Icahn's request for "extensive access" to its books, but said it offered the investor access to information about the company under a confidentiality agreement, but Icahn had declined the offer.

The mobile phone maker said earlier this year it is looking at its options, including a separation of its mobile devices business, after pressure from Icahn for such a move.

The Icahn Group said it filed a lawsuit in Delaware Chancery Court on Monday, seeking documents on Motorola's mobile devices business, including details on board discussions about the potential spinoff and the unit's 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 any, showing the use of Motorola's aircraft and property by senior management, the board of directors and their families. Icahn holds about 6.3 percent of Motorola, according to March 5 data.

He also questioned whether Greg Brown, recently appointed as chief executive, was qualified to do the job after more than a year of missteps by his predecessors.

In an e-mailed statement Motorola said Icahn had not laid out "a proper purpose" to give him inspection rights of its books under Delaware law.

COMPROMISES REJECTED

Motorola also accused Icahn, who has promised to share any information he receives with other stockholders, of seeking "to create further unnecessary distraction," as it had offered confidential access to its data.

Icahn declined Motorola's offer to support two of his director nominees, according to the Journal, which said the company would not support one of the candidates, Keith Meister, who manages Icahn's $8 billion fund Icahn Partners L.P.

Icahn was not immediately available to comment on the story and Motorola, which had previously urged shareholders to support its director slate instead of Icahn's candidates, declined comment.

Icahn said he wanted 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."