It’s been almost six months since one of the world’s leading medical technology companies decided to add audio industry dynamo Sound United to its portfolio. And due to the hefty figure, that Masimo sacrificed for ownership, the company’s Chairman and CEO Joe Kiani is now in deep water with a primary stakeholder.
Pulse oximetry powerhouse Masimo, founded by Kiani in 1989, is defending its somewhat empirically inclined strategies in court against Politan Capital Management LP. The lawsuit was originally filed by Politan’s New York headquarters against Masimo’s Delaware offices because of Masimo’s admitted attempt to shield itself from Board of Directors expansion.
After Masimo acquired the rights to manage the direction of Sound United brands, heavily contested by investors, it became clear through Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), that the company paid a higher amount than it should have.
As referenced in a Strata-gee article titled “Masimo Acquisition of Sound United Spurs Ugly Activist Shareholder Lawsuit,” in this case, Kiani turned down the foreseen big investor’s request to have a seat at the table.
As a major shareholder, Politan’s Chief Investment Officer Quentin Koffey asked for a meeting with Masimo to attain a position on the company’s Board of Directors. However, Kiani and the rest of Masimo’s board decided to change their bylaws, in order to block Politan from gaining strategic authority.
Of course, Kiani is not looking to submit to Koffey’s requests. But unfortunately for him, Koffey “won five of 14 board seats at Centene, as well as three of nine board seats at CoreLogic when he was a Senator,” according to CNBC.
This battle is seemingly headed in an ugly direction, as there are uncertainties in Kiani’s structural development of Masimo and Koffey is not looking to slow down his efforts to change Masimo dynamics.