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Former Matterport CEO Bill Brown is entitled to recoup $79 million from the company he once led, according to a new ruling from a court in Delaware.
Vice Chancellor Lori W. Will previously ruled that Matterport improperly restricted Brown from selling his shares in the company shortly after it went public in 2021. On Tuesday, Will wrote that Brown is entitled to collect money from Matterport based on the company’s higher share price when it went public.
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The opinion comes at a sensitive time for Matterport, which is in the process of being acquired by CoStar in a $1.6 billion deal. Both companies have said little after announcing the impending sale, which is expected to take three to nine months to close, depending on regulatory review.
Brown argued he was entitled to $141 million in damages based on Matterport’s all-time high share price, according to the opinion. Will rejected that argument and said she landed on $79 million based on when Brown likely would have sold his shares after Matterport became a publicly traded company in 2021.
Will also said Brown wasn’t entitled to the higher amount because there was essentially no wrongdoer in the case. The issue stemmed from bylaws that Matterport created before it went public that sought to restrict shareholders from selling their stock for six months so the company could stabilize after it went public.
Brown first challenged the bylaws, which were created after he had already signaled he wanted to sell his shares, in a lawsuit he filed in 2022.
“He argued his shares were excluded from the lockup,” Will wrote in her opinion. “He was right.”
Brown sold all of his shares for $80.4 million. Combined with the damages from his lawsuit, Brown earned $159.5 million from Matterport’s decision to go public, plus interest.
Neither CoStar nor Matterport immediately responded to a request for comment about whether the opinion would have implications for the sale. The damages are equal to nearly 5 percent of the price CoStar agreed to pay to acquire Matterport, a price that some financial analysts said was too high.
“CoStar is paying more than we would like (about 9 times 2024 revenue and about 20 times trailing non-GAAP gross profit),” analysts with the firm William Blair wrote last month. “It will likely drag on near-term profit, and there could be some antitrust concerns (appears CoStar would be obligated to litigate).”
Matterport said in a filing with the U.S. Securities and Exchange Commission that it anticipates appealing the ruling in the future.
