Carl Icahn sued Forest Laboratories Inc. for access to its books and records, alleging that the drugmaker is withholding information from shareholders and hasn’t met its commitments on corporate governance.
Icahn, 76, is demanding documents giving details of a 2011 stock repurchase program and information on the company’s succession plans, according to the complaint made public today in Delaware Chancery Court. Forest denied Icahn’s request for a full inspection, so he was forced to sue, according to the complaint.
“The purposes of the demand were to investigate potential mismanagement, breaches of fiduciary duty, conflicts of interest, improper influence and conduct and/or misleading public statements,” Icahn said in the complaint.
Icahn is New York-based Forest’s second-largest shareholder, with 9.9 percent of the stock, according to data compiled by Bloomberg. He nominated four directors to the company’s board this month in a proxy fight against the drugmaker.
“We regret that Mr. Icahn has resorted once again to his tired playbook designed for maximum distortion, distraction and litigation rather than engaging constructively with the company,” Forest said in an e-mailed statement. “Mr. Icahn is simply recycling arguments that were rejected last year by a vast majority of Forest shareholders.”
Forest said the company is engaged in ongoing succession planning with the help of an executive search firm to provide candidate evaluation services at the appropriate time.
Icahn argued in his complaint that in the absence of a viable succession plan, it appears Chairman and Chief Executive Officer Howard Solomon, 84, who has been on the board for the last 48 years, intends to hand over the company to his son.
“Solomon is one of the most successful CEOs in the industry and it would be both inappropriate and unusual to announce his successor at this time,” the company said.
In a letter submitted after the complaint, lawyers for Icahn asked Chancery Court Judge Leo E. Strine Jr. to schedule a conference to establish a trial date at the end of July. Forest’s annual shareholder meeting is scheduled to take place on Aug. 15, according to the letter.
“The materials plaintiffs seek will contain information important to the stockholders in making their decision and to the proxy advisory firms in making their recommendation,” Richard Renck, an attorney for Icahn, said in the letter.
Among the items Icahn requested are documents detailing the company’s announcement earlier this month that it was reducing its fiscal year 2013 earnings guidance by more than 30 percent, and details on whether Forest’s board caused the company to enter into contracts with “onerous” change of control provisions, according to the complaint.
Forest offered to produce a limited number of documents related to the share repurchase program, its revised earnings guidance and the contractual change-in-control provisions, according to the complaint.
“The Icahn parties were unable to accept the limited inspections because it failed to include the rights to inspect information that is absolutely critical to the looming decision before the Forest electorate,” Icahn said in the complaint.
Forest rose 2.4 percent to $34.95 at 3:13 p.m. in New York trading. The shares have gained 15 percent this year.
The case is High River Limited Partnership v. Forest Laboratories Inc., CA7663, Delaware Chancery Court (Wilmington)