(Bloomberg) -- Crown Castle Inc. co-founder Ted Miller ratcheted up a proxy fight with the cellular tower company’s board, suing directors over a cooperation agreement they struck with Paul Singer’s Elliott Investment Management.

Miller, who helped launch Crown Castle in 1994, says the board is improperly beholden to activist investor Elliott, one of the company’s largest shareholders. Elliott signed a cooperation agreement with Crown Castle in December and got two board seats.

The agreement amounts to an “unreasonable and disproportionate defensive measure,” Miller argues in the suit, filed Tuesday in Delaware Chancery Court. He is asking the court to invalidate the pact, which he says harms Crown Castle shareholders by subjecting them to “the whims of Elliott and the artificial constraints imposed” by the pact on decisions such as finding a new chief executive officer. 

‘Backroom Deals’

“The affairs of Delaware corporations, however, must be managed by boards of directors, not backroom deals,” Miller said in the complaint. 

Crown Castle’s shares were up 2.6% to $108.35 at 3:21 p.m. in New York on Wednesday, giving the company a market value of about $47 billion. The shares rose about 5% the day after Elliott disclosed its stake in November.

The company said the lawsuit had no merit. 

“Crown Castle’s board and management team are focused on conducting the company’s business, including completing the strategic and operating review of the fiber business and its CEO search, in a manner that is in the best interest of the company and its shareholders,” it said in a statement.

In a Feb. 20 letter, a lawyer for Crown Castle said Miller’s position was laced with “factual inaccuracies” and “completely distorts the nature of the relationship between CCI and Elliott.”

A representative of Elliott, which is also named as a defendant in the suit, had no immediate comment on it.

Elliott’s Push

Elliott urged Crown Castle late last year to begin a search for new board members and management as well as a review of its fiber business. It said it had a stake of about $2 billion in the company, according to a letter to the Crown Castle board. It had earlier asked the company to consider strategic options for the fiber unit in 2020.

Read More: Elliott Investment Calls for Overhaul at Crown Castle

The company announced a CEO search and a review of the fiber operations a month later, as part of the pact with Elliott. It also appointed two new directors, including Elliott portfolio manager Jason Genrich. It announced in December that CEO Jay Brown was retiring. Brown was replaced by board member Anthony Melone on an interim basis.

Miller, who left Crown Castle in 2002 according to his LinkedIn page, has about $100 million of “economic exposure” in the company’s common stock, together with his affiliates, according to the lawsuit. He has publicly criticized the Elliott agreement and is calling for it to be put to a shareholder vote. He has dismissed Elliott’s direction of the company as lacking in “expertise, vision and urgency.”

Miller and his Boots Capital Management have put forward four board candidates of their own, including Miller himself and his son-in-law. Crown Castle officials have rejected that slate, saying the nominees “do not possess the relevant expertise and experience.”

The case is Miller v. Bartolo, 2024-0176, Delaware Chancery Court (Wilmington).

(Adds the interim appointment of Anthony Melone in last section. An earlier version of this story was corrected to make it clear that the Elliott representative had no immediate comment on the lawsuit.)

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