Activist investor Carl Icahn, who is seeking representation on the board of Forest Laboratories Inc., said he is suing the U.S. drugmaker to obtain more information about its succession planning.
In a letter to the company's board, Icahn expressed concern that the Forest's longtime chief, Howard Solomon, might hand over the reins to his son, David Solomon, who is senior vice president for corporate development and strategic planning.
"Howard Solomon and this board, who collectively own less than 2 percent of this great company, must be made to realize that Forest Labs is not a dynasty to be despotically handed down from father to son," Icahn said in the letter, filed with the U.S. Securities and Exchange Commission on Friday.
In a statement, Forest dismissed Icahn's criticism and said it was "engaged in ongoing succession planning." The company's independent directors have retained an executive search firm "to, among other things, provide internal candidate evaluation and external candidate benchmarking services," the company said.
Regarding the 84-year-old Howard Solomon, who has led the company for about 35 years, Forest said: "It would be both inappropriate and unusual to announce his successor at this time."
After failing to win any representation in a proxy battle last year, Icahn is again seeking to place four members on the Forest board. The annual meeting is set for Aug. 15. Icahn is Forest's second-largest shareholder.
An Icahn entity filed the lawsuit on Thursday, seeking internal records "to determine whether they should bring suit against Mr. Solomon, the Forest directors and perhaps others" for breaching their fiduciary duties to shareholders.
According to the lawsuit, filed in Delaware's Court of Chancery, Icahn is seeking information relating to "a peculiar stock repurchase program" in 2011 that might have been arranged to "ward off a proxy contest by the Icahn Parties."
The complaint also demanded records regarding a recent Forest announcement slashing its earnings guidance.
Icahn brought a similar lawsuit seeking internal Forest documents a year ago. The parties reached a confidential settlement.
Forest shares were up 2.2 percent at $34.87 on Friday afternoon on the New York Stock Exchange.
The case is High River Limited Partnership et al v Forest Laboratories Inc., Delaware Court of Chancery, No. 7663.
© 2015 Thomson/Reuters. All rights reserved.