Kerr-McGee Sues to Fend Off Icahn, Investors

Oil producer Kerr-McGee Corp. sued billionaire Carl Icahn, and a group of investors, saying they plan an “unfair” proxy battle after having bought a stake in the company without making proper disclosures.

Icahn and affiliated investors began accumulating a 7.65% stake in Kerr-McGee in December, the company said in a lawsuit filed Thursday in U.S. District Court in Oklahoma City.

According to Kerr-McGee, the investors violated federal law by failing to disclose the identity of each group member, the number of shares they own and the purpose of the stock purchases.

The Oklahoma City company asked the court to order Icahn, Barry Rosenstein and the other investors to file proper disclosures and lose voting rights on any shares acquired before having done so.

The company also asked that the investors be blocked from buying more shares or taking other action to change control of Kerr-McGee until 30 days after the disclosures are made.

Icahn and Rosenstein, who have requested seats on Kerr- McGee’s board, haven’t indicated that they want to buy the company. The company rejected repeated calls by the investors for Kerr-McGee to sell some of its oil and natural gas production in advance to raise cash for share buybacks.

“In a takeover contest, all sorts of allegations and the use of the judicial process take place on both sides,” said Charles Elson, director of the University of Delaware corporate governance center. “It takes different shapes and forms, but it’s not unusual. It’s certainly a battle over a form of corporate control.”

Icahn and Rosenstein, managing partner of Jana Partners, said Thursday that if Kerr-McGee continued to ignore their suggestions, they would seek election as directors at the shareholder meeting in May.

The investors didn’t respond to messages left at their offices seeking comment.