His lawsuit calls Occidental's $38 billion (30 billion pounds) purchase of Anadarko "fundamentally misguided and hugely overpriced" and asks for access to Occidental's financial records and details of negotiations.
Icahn, who owns $1.6 billion worth of Occidental shares, accused the board of being "far over their heads," saying they "made numerous blunders in recent months and might continue to trip over their feet if the board is not strengthened," the lawsuit said. He also criticized Occidental Chief Executive Vicki Hollub and her management team for taking $100 million in pay since 2016.
Occidental said it would respond to the lawsuit and expects to complete the merger this year. Its bid for Anadarko topped one by Chevron Corp and includes a $10 billion financing deal with Warren Buffett's Berkshire Hathaway Inc.
"Occidental is committed to maximizing long-term value for all shareholders, and our board and management team continually evaluate opportunities to that end," the company said.
Icahn's lawsuit, filed in Delaware Court of Chancery, seeks documents that detail Occidental's sale of preferred stock to Berkshire, which he described as a "desperate" move, and information on a deal to sell Anadarko's Africa assets to Total SA for $8.8 billion.
The merger of the two U.S. shale producers would increase Occidental's debt to around $40 billion, assuming it sells the Africa assets to Total.
Icahn may seek to call a special meeting of shareholders to remove and replace directors, the suit said, and believes Occidental should have been a seller rather than a buyer.
"That would have been the stockholder-friendly thing to do," the suit said. It also ask for details on whether other companies have inquired about buying all or part of Occidental.
The Berkshire investment allowed Occidental to increase the cash portion of its bid for Anadarko and eliminated the need for Occidental to win approval from its own shareholders.
The acquisition is "little more than an enormous bet on the price of oil," the lawsuit said, adding that "if management's dreams of glory require placing the stockholders' dividends at risk, the stockholders really ought to be asked whether they agree."
Icahn was not the only investor to take issue with the lack of a shareholder vote on the deal.
T. Rowe Price Group Inc said it would vote against the Occidental board of directors at the company's annual meeting earlier this month because the company would not allow shareholders to vote on its bid for Anadarko, which T. Rowe Price and other shareholders opposed.
Occidental shares closed down a fraction at $51.91 on Thursday, near a 10-year low. The shares are off from $65.33 on April 12 when the company's interest in Anadarko was first disclosed.
(Reporting by Jennifer Hiller; additional reporting by Tom Hals; editing by Bernadette Baum, Susan Thomas and Cynthia Osterman)
By Jennifer Hiller
