Palantir holder says company sabotaged stock sale to Chinese

Alex Karp co-founder and CEO of Palantir Technologies speaks at the WSJD Live conference in Laguna Beach, California, U.S., October 26, 2016. REUTERS/Mike Blake

One of Palantir Technologies Inc.’s early investors accused the data-mining startup of sabotaging his attempt to sell his $60 million stake to a Chinese company so directors and executives could enrich themselves by selling their stock instead.

Marc Abramowitz, a 63-year-old lawyer and investor, contends that when Palantir executives got wind of his offer to sell his stock to Chinese private equity firm CDH Investments Fund Management Co., they sunk the deal by offering to sell their shares to CDH instead, according to a lawsuit filed Thursday in Delaware.

Palantir’s campaign to spoil Abramowitz’s sale demonstrates the Silicon Valley company’s “willingness to intentionally interfere with shareholder transactions in an effort’’ to control who benefits from share sales, according to Abramowtiz’s Delaware Superior Court suit.

It’s the latest salvo in a legal skirmish between Abramowitz, one of Palo Alto, California-based Palantir’s earliest backers, and the secretive data miner, which analyzes data for companies, law enforcement and government agencies worldwide.

California Case

Palantir sued Abramowitz in state court in California last year, accusing him of stealing information about the company’s technological developments in fields such as cyber-insurance and drug trials and filing for patents on that data.

Lisa Gordon, a Palantir spokeswoman, didn’t immediately return a call or an email seeking comment on Abramowitz’s suit. Kevin Orsini, a lawyer for Palantir, said in a recent court hearing that the company’s relationship with its early backer is “now fractured.”

Founded in 2004 with funding from billionaire Peter Thiel, Palantir is among Silicon Valley’s most highly valued and secretive companies. In addition to Abramowitz’s investment firm KT4 Partners LLC, another early backer was the venture capital arm of the U.S. Central Intelligence Agency.

Palantir’s customers include government spy agencies around the world, as well as banks and other businesses. It’s well-positioned to cash in on more government work thanks to Thiel’s relationship with President Donald Trump. Thiel was one of the real estate developer’s early backers, serving as a special adviser on his transition team and helping fill some administration positions with employees from his venture fund and longtime associates.

IPO Plans

Having increased its non-government customers in recent years to include companies like Merck KGaA and Airbus SE, Palantir will turn a profit in 2017 for the first time, Chief Executive Alex Karp told Bloomberg earlier this year. Karp has said as a profitable company he might explore an IPO, but declined to provide details.

A recent study showed closely held Palantir is struggling to hang on to its $20 billion valuation. If it doesn’t rein in spending and retain corporate customers it will have difficulty going public at that valuation in 2019. Abramowitz contends the startup hasn’t held a stockholder meeting in more than a decade and hasn’t made proper financial disclosures.

Abramowitz also is pushing Delaware Chancery Court judge to force Palantir to hand over files about its inner workings, along with records about its decision to seek to co-op the CDH deal. The judge is still deciding whether to grant the investor access to the internal information.

In his most recent suit, Abramowitz argued Palantir’s efforts to sabotage the CHD deal cost him money because the Chinese were offering more for his stake than investors are now willing to pay. He’s seeking “damages for tortious interference with prospective economic advantage,’’ according to the suit.

Orsini, arguing that Abramowitz shouldn’t have access to Palantir files, told a judge Dec. 12 the investor’s legal campaign against the data miner amount to “retribution and retaliation” for the company’s California trade-secrets suit.

The most recent case is KT4 Partners LLC v. Palantir Technologies, Case No. N17C-12-212, Delaware Superior Court (Wilmington). The case over Palantir’s files is KT4 Partners LLC v. Palantir Technologies Inc., 2017-0177, Delaware Court of Chancery (Wilmington).

Bloomberg

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.