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Promega, CEO Linton Return Fire in Legal Battle with Shareholders

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2015, Brand, Kellner, and Shain were allegedly discussing different options for getting what they deemed to be a fair amount of money for their shares in Promega. According to one of the counterclaims, they sent a letter to Mello and other Promega board members claiming that “a large group of shareholders had become increasingly concerned with the actions of [Promega’s] management toward shareholders.”

Not long after sending the letter, attorneys for Promega say, Brand wrote to Kellner and Shain about different things they could try to secure Mello’s support. Brand, who along with Kellner is a major donor to UW-Madison, allegedly wrote that “[h]opefully [Mello] knows where his bread is buttered and exactly who Mr. Kellner is. If he is a problem, we might want to get a copy of our … letter into the hands of our good friend Mike Knetter.” Knetter is the former dean of the university’s business school, where Mello teaches. Brand also floated the idea of having the school take away Mello’s parking spot or season tickets to Wisconsin Badgers home football and basketball games, according to court documents filed by Promega lawyers.

Brand, who Promega lawyers call the “ringleader” of a “conspiracy” to force the company’s board into purchasing certain stockholders’ shares for allegedly overly high prices, seemed bellicose in an e-mail to Shain about turning both Promega’s board and shareholders against Linton.

“I am prepared to spend and take whatever actions are necessary to get us where we need to go,” Brand said, according to court records. “The board better fully understand this because once his [sic] train leaves the station, there is no turning back and things will get very hot and ugly for [the board] in a hurry … Bill and these directors will be like Hitler and the Nazis trying to win a two-front war. I guarantee they will have the same ugly result.”

The e-mails sent between Brand, Kellner, and Shain that have been added to the case file include some nasty comments. For example, in early 2015 Brand apparently described a desire to “beat the crap out of” Linton and on other occasions discussed a potential plan to “dig up dirt” and “blackmail Bill.” The recently released documents also include a handwritten note that appears to have been sent by Brand to Linton, saying that if he and others on Promega’s board agreed to pay “the right price” for Brand’s family’s shares, they would “go away forever.” But, Brand allegedly warned, “If you don’t play ball, we will be a thorn in your side for the next 10 years.”

Nevertheless, some of the court documents appear to bolster the claim by plaintiffs that Linton and other leaders at Promega have been resistant to bring in an independent group to assess the value of the company.

In October 2014, Linton apparently sent an e-mail to Brand in which he said that Promega’s “board and management team has concluded that an independent valuations appraisal is no longer needed.” Part of the reason they reached that conclusion was that Promega had discontinued the granting of new stock options, Linton allegedly wrote. Around that same time, Brand hired a forensic accountant named Cindy Jones to appraise Promega’s stock, according to court documents filed by Promega attorneys. Without revealing the valuation Jones came up with, they write in the counterclaims that her appraisal was “fundamentally flawed.”

While the two sides disagree over how much Promega is worth today, it appears that its stock … Next Page »

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