Promega’s Kepler Center, 5455 Nobel Drive, Fitchburg, opened in late 2015 to handle worldwide product distribution for the privately owned biotechnology company.

Attorneys for Promega Corp. founder and CEO Bill Linton and for the Fitchburg biotechnology company itself are asking a judge to dismiss a shareholder lawsuit against them, saying the suit is a “greenmail” attempt to obtain “an unwarranted financial windfall.”

“Greenmail” is the practice of buying enough shares in a corporation to threaten a takeover, forcing the corporation or other shareholders to pay an inflated price in order to retain the status quo,” a brief supporting the dismissal motion states.

The document strikes back at unhappy Promega shareholders who filed suit in July, saying that Linton has “bullied, lied, threatened, and manipulated” his way into getting majority control of the company, and now intends to give them no chance for a “fair return on their investment until at least 2078.”

Linton's lawyers filed the dismissal motion in Dane County Circuit Court on Thursday, and in a 36-page brief filed in support of the motion, also on Thursday, Promega’s attorneys say the disgruntled shareholders are inappropriately claiming to be “oppressed” and are alleging “a parade of future horribles” that are no more than speculation.

It is the first time Linton’s and the company's perspective have been spelled out since shareholders Nathan Brand and Ted Kellner began their organized effort to buy up shares and take over the company, a year and a half ago.

It also provides some details on how Promega shares have been priced over the years, and it discloses at least one attempt to buy Promega — by an unnamed “outside company” — in 1989.

Promega is a “global leader in providing innovative solutions and technical support to life scientists,” according to the brief.

The privately owned company, founded in 1978, has 3,600 products, including DNA fingerprinting kits, and nearly 1,400 employees worldwide, with more than 800 of them in the Madison area.

Its revenue for the fiscal year that ended March 31, 2016, was $370 million, according to the annual report to stockholders, obtained by the Wisconsin State Journal.

Gross revenue has jumped nearly $120 million since 2011, the Promega brief says.

As Promega has shown “remarkable growth,” so has the value of its stock seen a “steep increase,” says the filing.

In 1984, the average purchase price was 36 cents per share. By 2005, Promega stock cost $31.48 a share. Last fall, the company offered to buy back stock at $383 a share.

“That represented a 10-year shareholder return of 1,117 percent. By contrast, in the same time period, the S&P 500 returned 113 percent,” the Promega filing says.

Brand, a Madison native and Miami businessman, and Kellner, a well-known Milwaukee businessman, are among the Promega shareholders who filed the lawsuit against the company nearly two months ago.

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The two had offered to buy the company’s stock last year at $625 a share — a total of around $1.2 billion — saying the company’s buyback offer was priced too low in comparison to Promega’s success.

The pair appealed to Promega’s board of directors and to other stockholders, claiming Linton had used scare tactics to get some owners to sell their shares to him.

They said they feared Linton would use Promega’s stock to support Usona Institute, a nonprofit Linton co-founded in 2014 to research the possible therapeutic effect of psilocybin, or psychedelic mushrooms, on depression and anxiety.

After Promega’s elected board of directors resigned, a new board — appointed by Linton and made up solely of Promega managers — spurned the offer. With Linton now holding a majority of the stock, the buyout effort failed. Another request by Brand and Kellner earlier this year, for a buyback at $575 a share and appointment of an outside director, also was rejected, their lawsuit said.

The response filed Thursday by Promega's attorneys says the shareholder lawsuit “ignores the fundamental reality of investing in a private corporation like Promega.”

Private corporations, “no matter how successful,” are not required to pay dividends or pay a certain price for their stock, the document says. Repeatedly calling the Brand-Kellner buyout proposal a “hostile takeover offer,” the brief says the plaintiffs “harassed” the board with demands for records “to which they were not entitled under Wisconsin law.”

It says the board rejected the buyout proposal, in part, because it would have included $630 million in debt, and the board was concerned about the impact of that debt on operations as well as the potential impact of new management on employees, customers and vendors.

When the takeover failed, the plaintiffs tried “greenmail” with their $575 per share proposal, Promega's brief says.

It says there was no “oppression” of shareholders, not even “an inference of willful misconduct, an improper personal profit, violation of criminal law, or a willful failure to deal fairly” with stock owners.

As for concerns about Usona obtaining a controlling interest in Promega, even if that did happen, “it is pure speculation and foolish to boot” to think Usona would not want Promega to continue its success, the filing says.

“The plaintiffs allege a parade of future horribles,” the Promega brief says. “Yet the parade, if there is one, has not started.”

The case is before Dane County Circuit Court Judge John Markson.

EDITOR'S NOTE: This story has been corrected to show that the dismissal motion was made by CEO Bill Linton's attorneys and the brief in support of the motion was submitted by Promega's attorneys.

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