Republican presidential candidate Mitt Romney said he didn’t think a chain of office supply stores like Staples Inc. was a good idea when he first heard of it, and that a class of shares was created as a favor to its co-founder, Tom Stemberg, because he “needed a settlement with his wife.”
The 1991 testimony in Stemberg’s divorce case deals with the investment in Staples by Bain Capital LLC, the private- equity firm Romney co-founded. He addressed the valuation of the company, the stock Stemberg’s wife got from it, and the business relationship between the two men. Romney said when initially presented with the proposal for an office-supply chain in about 1985, “I didn’t think it was a very good idea.” Later, he said, he was “impressed with the quality of the thinking.”
The testimony was released today by Massachusetts Probate Judge Jennifer Ulwick after a hearing yesterday where Stemberg’s ex-wife urged its release, initially requested by the Boston Globe. At a hearing in Canton, the judge said that while Romney’s testimony would be disclosed, a confidentiality agreement between the ex-spouses remains in effect.
Romney said the initial investment Staples was $1.5 million. He valued the shares of Staples at about $1.50 to $2 a share in late 1987 and early 1988. The lawyer who questioned him said Stemberg’s wife negotiated a sale of her shares at $2.25 to $2.48, according to the transcript.
“In my opinion that’s a good price to sell the securities at,” Romney said, according to the transcript. Romney also said that a new class of shares was created specifically for Stemberg.
“It was initiated as a favor,” Romney testified. “Tom needed to have a settlement with his wife.”
Stemberg, 63, spoke this summer at the Republican national convention, where Romney, the former governor of Massachusetts, was given his party’s nomination for president in the Nov. 6 election against President Barack Obama.
Stemberg is also the co-founder and managing general partner of Highland Consumer Fund, a venture capital fund based in Cambridge, Massachusetts, that focuses on retail and consumer service companies. It is affiliated with Highland Capital Partners LP.
Framingham, Massachusetts-based Staples grew with the help of an investment from Bain. Bain’s initial investment was 80 cents for each preferred share, according to the transcript.
Romney said, according to the transcript, that “we found Tom difficult to deal with from a negotiating standpoint.”
Stemberg’s lawyer, Brian Leary, told the judge today that Romney’s statements a “primer” on Staples’ early development. Lisa Arrowood, a lawyer for Staples, said the company doesn’t oppose the release of the testimony.
Gloria Allred, a women’s rights lawyer, appeared yesterday in court with Stemberg’s ex-wife, Maureen Sullivan Stemberg, and said she was backing a request by the Boston Globe to unseal the documents.
Allred opposed the confidentiality order, telling the judge she wants her client to be able to talk about Romney’s testimony.
“She needs to be able to speak,” Allred told the court. “She apparently is the only person in the U.S., maybe in the world, who cannot speak about Governor Romney.”
Allred’s clients have included Sharon Bialek, the woman who accused Herman Cain, a Republican candidate for president, of sexual harassment, which led to his withdrawal from the race. She also represented Jodie Fisher, who said former Hewlett- Packard Co. Chief Executive Officer Mark Hurd made improper sexual advances toward her while she was under contract to handle company events. Hurd resigned from Hewlett-Packard in 2010 after it found he had violated company conduct standards.
Allred said the judge’s decision is “the most comprehensive gag order I have ever seen in my 36 years of practicing law.”
The judge said Margaret Sullivan Stemberg could file a new motion to modify the order. Allred declined to comment further on the case when reached today.
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