Law360 (February 11, 2022, 10:29 PM EST) — Tensions within Aerojet Rocketdyne Holdings Inc.’s leadership erupted in Delaware’s Chancery Court on Friday when Aerojet and its CEO sued to oust the executive chairman, whom Aerojet says is undermining its disputed $4.4 billion merger with Lockheed Martin Corp.
Aerojet Rocketdyne, CEO and President Eileen P. Drake and three other board members sued the other half of the company’s eight-member board, including Executive Chairman Warren Lichtenstein, who has launched a proxy war to wrest control of the company. Lichtenstein and his supporters have paralyzed the board in the meantime, which Aerojet Rocketdyne says threatens to unravel its tie-up with Lockheed Martin as federal regulators in late January sued to bust the deal.
“Never more than now, Aerojet Rocketdyne’s stockholders need a fully-functioning board to ensure compliance with the terms of the merger agreement and a fully aligned management continuing to fulfill its fiduciary obligations,” the complaint says.
According to the complaint, Lichtenstein had opposed the merger in its beginning stages, allegedly pushing alternatives that Aerojet Rocketdyne criticized as inappropriate and pressuring board members to reject Lockheed’s offer. After the board approved the merger, Aerojet says that Lichtenstein retaliated by leaking his disapproval to industry figures, as well as his intent to take control of the company if the deal fell through.
The suit takes further aim at the notice sparking the proxy fight, alleging it was faulty under the company’s bylaws.
Representatives for both parties didn’t immediately respond to after-hours requests for comment. The cases are Aerojet Rocketdyne Holdings Inc. et al. v. Aerojet Rocketdyne Holdings Inc. et al., case number 2020-0146, and In Re Aerojet Rocketdyne Holdings Inc., case number 2020-0127, both in the Court of Chancery of the State of Delaware.