A biotech company embroiled in a legal tussle culminating from its merger with a blank check company has agreed to a $60 million settlement, which includes resolving claims involving the law firm Cooley LLP.
Biote Holdings, a firm specializing in hormone optimization therapies, settled a lawsuit filed in Delaware Chancery Court by Marci Donovitz, the ex-wife of the company’s cofounder. The legal dispute revolved around allegations that her shares were diluted through a merger with Haymaker Acquisition Corp. III, a special purpose acquisition company (SPAC). The lawsuit accused company insiders of benefiting from a transaction that purportedly delivered nearly no cash to Biote Holdings and implicated Cooley in “tricking” Dr. Gary Donovitz, the company’s founder, into closing the merger deal. The transaction allegedly resulted in around $135 million in cash and stock benefits for corporate insiders while failing to provide the necessary operating cash for the business.
The SPAC merger between Haymaker and Biote took place in 2022, leading to accusations that San Francisco-founded Cooley LLP played a critical role. Specifically, Cooley partner Ryan Sansom was alleged to have threatened Dr. Donovitz with considerable personal liability if the merger did not proceed. This litigation against Cooley is one of several recent legal challenges involving SPAC mergers and their fiduciary obligations.
In addition to this settlement, Dr. Donovitz resolved another lawsuit in April for $77 million. Under the current settlement terms, Biote will repurchase Marci Donovitz’s shares over a three-year period, beginning with an upfront payment of $30 million. The agreement releases claims against Cooley LLP, as confirmed by a Cooley representative.
According to William A. Brewer III of Brewer, Attorneys & Counselors, which represented Ms. Donovitz, the settlement underscores that the transaction was primarily a strategy to funnel financial and managerial advantages to a select group of insiders. Biote Holdings publicly announced the settlement, and as of this report, no immediate comment was available from a Cooley representative.
The case title for this legal proceeding is The Donovitz Family Irrevocable Trust v. Weber, Del. Ch., 2024 0617.
Further details about the resolution of this lawsuit can be found here.