We talked about the lawsuit between Promega Corp., a biotech company based in Madison, Wisconsin, and its shareholders a couple months ago in this blog post. At the time, Circuit Judge Valerie Bailey-Rihn said she was convinced minority shareholders had been oppressed by the company and its founder and CEO, Bill Linton, but she was unsure of the best way to remedy the situation and make sure the oppressed shareholders received a fair return on their investment. If she accepts the settlement agreement reached by both parties, she might not have to spend any more time deliberating.
Over the summer, both parties had said they were willing to have a third party buy the shares from the minority investors. All that was needed was to define the terms of the settlement, which they did. Afterwards, they submitted an order to dismiss the case.
The third party is Eppendorf AG, a German company that makes life science instruments. Having a third party buy the shares off the minority investors is a solution that works for everyone because the minority shareholders get a return on their investment without the company having to liquidate any assets to come up with the money to buy the shares back. The judge had mentioned the option of dissolving the company in order to come up with the funds to pay back the minority shareholders, but that would have been a drastic option.
The amount of the settlement has not been made public, but Karen Burkhartzmeyer, a spokesperson for Promega, has said the settlement is fair to all parties and affirms Promega’s commitment to remaining a private company.
Prior to the filing of the lawsuit in 2014, it looked like Promega was on its way to becoming a publicly-traded company until Linton announced his plan to celebrate the company’s centennial as a privately owned company. A couple years later, Nathan F. Brand, Nathan S. Brand, and Ted Kellner, longtime shareholders of the company, sued both Promega and Linton, alleging Linton had used threats, lies, and manipulation to gain majority control of the company. The lawsuit further alleged Linton was aiming to transfer his controlling shares of the company to Usona Institute, a research institute found by Linton.
Linton countersued with allegations of fraud, conspiracy, and racketeering. His lawsuit claimed the shareholders were attempting a sort of coup to take control of the company away from him.
The case went to trial, and after three weeks the judge overseeing the case said it was likely she would conclude the company’s minority shareholders had been oppressed by both Linton and the company. That announcement might have encouraged Promega and Linton to reach a settlement agreement with their minority shareholders.
The two sides agreed that the price of Promega’s shares had increased since the lawsuit was first filed back in 2014, but they had disagreed about which price point to use when buying back the shares from minority investors. Attorneys for the investors argued the price should be the current value of the stocks, while attorneys for Promega and Linton argued the price should be the value of the stocks at the time the shareholders filed the lawsuit.
Which price point was used (or whether they agreed on a price somewhere in the middle) has not been made public.
At Lubin Austermuehle, we’re all business when it comes to offering the highest level of quality service to businesses engaged in complex disputes, whether it’s shareholder oppression, breach of contract, defamation and far more. We’re business dispute and shareholder and LLC member oppression attorneys who have earned a reputation for victories, including what Crain’s Chicago Business called “the largest class action settlement in Illinois.” From Schaumburg and Evanston to the North Side, we are here for you. Call and take advantage of our FREE consultation where we can discuss your specific needs and wishes and our ability to meet them. Contact us here or call us on our toll-free number at 833-306-4933 or locally at 630-333-0333.