A Nebraska judge has determined that a biotech company seeking to purchase the shares of a trust established by its founder must pay $467 million for those shares, in what counsel for the plaintiffs say is one of the largest valuation disputes in the state court's history.

On Tuesday, a judge from the District Court of Sarpy County, Nebraska, found that the Wayne L. Ryan Revocable Trust owned $467 million of the fair market value of the biomedical company Streck Inc., and that the trust was entitled to 12% prejudgment interest starting in late 2014. The ruling assigned more than $300 million over the defense's competing valuation.

The ruling resolves a dispute between Dr. Wayne Ryan, the deceased founder of Streck, and his daughter Constance “Connie” Ryan, who is CEO and chairwoman of the company, over how much the company was required to pay to buy out the trust's shares.

In a 74-page opinion outlining the valuation of the company, Judge Nathan Cox, who handled the case, said Streck's valuation expert showed a “downward bias,” and so the court adopted the valuation provided by the trust. Cox further noted that the higher value estimation was fair, given that it was Dr. Ryan who founded the company in 1971.

“It is undisputed that Dr. Ryan founded Streck and developed the technology upon which the company is built,” Cox said. “He was also instrumental in establishing the relationship with Streck's biggest customer, Sysmex. In sum, Dr. Ryan created Streck's value.”

Omaha, Nebraska-based Husch Blackwell attorneys Marnie Jensen and Kamron Hasan, as well as Chicago-based Holland & Knight partner Richard Winter and former Holland & Knight lawyer Maureen Schoaf, now listed as litigation counsel for a Chicago firm, represented the trust.

“This case was about much more than simply affixing a value to shares or the efficacy of valuation methodologies,” Jensen said. “We felt we were fighting for the legacy and life's work of a true innovator in the medical sciences who was being badly mistreated by the company he had created from nothing. He deserved to be fairly compensated for his shares.”

Omaha-based Kutak Rock litigation partner Victoria Buter represented the defendants.

“Based on the law and the evidence that was presented and admitted at the hearing, Streck respectfully disagrees with the fair value placed on the shares held by the Wayne L. Ryan Revocable Trust,” the company said in a statement. “Streck intends to pursue all available remedies to challenge the order.”

According to Cox, Connie Ryan is Dr. Ryan's oldest daughter, and when her mother died in March 2013, she passed all of her voting control to Connie. Connie then took over the role as CEO and chairwoman of the board of directors, replacing her father. The company develops and manufactures quality control and diagnostic products for research and clinical use.

Dr. Ryan then sued, contending that Connie breached her fiduciary duties. The lawsuit sought, among other things, that the company be sold to a third party.

Streck subsequently formed a litigation committee to determine what steps to take regarding the suit. The committee eventually recommended that the company buy all of Dr. Ryan's shares, instead of sell the company.

The company filed an election to buy Dr. Ryan's shares in January 2015, but the parties were unable to come to a determination about the valuation of the company.

According to Cox, the company made an offer to buy Dr. Ryan's shares for $219 million in February 2015, but the following month, the company asked the court to stay proceedings until a determination of fair value could be made.

In the meantime, the company undertook a project to sell itself, but that project ultimately failed, and Dr. Ryan died in 2017.

A bench trial was held in late 2018 regarding the company's valuation. Cox said there was no dispute that Ryan's Trust shares included more than 52 percent of the cash and investments held by Streck.

Cox said Streck's expert said the value of the company was $505 million, but that was $100 million less than the highest bidder made while the company put itself up for sale, and $39 million less than another offer that came in.

“This disparity, standing alone, leads to the conclusion that Streck has failed to meet its burden of proof with respect to the fair value of Streck and Dr. Ryan's shares,” Cox said.

READ THE RULING:

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