Potential Fly in the Ointment for CoStar's Matterport Deal as Former CEO Entitled to $79M Payout

May 31, 2024
Share this Post: 

A potential stick may have been thrown in the spokes of CoStar's deal for Matterport as a Delaware judge ruled this week that former Matterport CEO Bill Brown is entitled to recoup $79 million from the company.

Vice Chancellor Lori W. Will had already determined in a previous ruling that Matterport improperly restricted Brown from selling his shares shortly after the company went public in 2021. In her latest edict, Will stated that Brown is entitled to compensation based on the company’s share price at the time of its IPO.

The ruling comes at an interesting juncture for Matterport, as it is in the process of being acquired by CoStar in a $1.6 billion deal. The merger is expected to take three to nine months to finalize, pending regulatory approval with some experts claiming that the Washington-based commercial real estate behemoth is overpaying for Matterport.

Brown had initially sought $141 million in damages, arguing that he should be compensated based on Matterport’s peak share price. However, Judge Will rejected this claim, deciding that $79 million was an appropriate amount that reflects the period when Brown would likely have sold his shares post-IPO in 2021.

The case ultimately stemmed from company by-laws that Matterport introduced before going public that restricted shareholders from selling stock as the company stabilized.

Brown challenged these bylaws in a 2022 lawsuit, arguing that his shares were excluded from the lockup period and was right to do so in the opinion of the Judge.

Brown ultimately sold all of his shares for $80.4 million. Including the damages from his lawsuit and has earned a total of$159.5 million from Matterport’s IPO, plus interest.

Neither CoStar nor Matterport responded immediately to requests for comment on whether the ruling would affect the takeover deal. Matterport indicated in a filing with the U.S. Securities and Exchange Commission that it plans to appeal the ruling.

May 31, 2024
Since March 2020 Edmund's job has been to read about, write about, collect data on, analyse and generally know about real estate marketplaces and the companies that run them. Before that he worked at the aggregator Mitula Group (which became Lifull Connect) for five years.

Subscribe to our mailing list to get the famous, free Friday newsletter!

News and analysis to help build better online marketplace businesses, in your inbox, every Friday

Related News

Propertypal Belfast Houses
Agents Agree to End Boycott of Northern Irish Portal PropertyPal After Talks

An agent boycott of leading Northern Irish real estate vertical PropertyPal appears to have been ended after positive talks between...

Read More
Investment And Funding Roundup 19 July 2024
Investment and Funding Roundup: Lhoopa, StudentTenant, Renters.pl

We've spotted three significant funding and investment movements this week, from an $80 million round in South Asia and two...

Read More
Product Roundup 19 July 2024
Product Roundup: SeLoger, SMG, OnTheMarket, Zoopla, BCG, ViewIT

We've spotted six interesting stories around the world in this week's Product Roundup, including some healthy competition in the UK....

Read More
Costar And Realtor.com
Move Inc. Files Injunction Request Against Unimpressed CoStar

Move Inc. has filed a motion for a preliminary injunction against CoStar and its former employee James Kaminsky from "any...

Read More

Editor's Pick