Further Complaint over Infogroup Bid

A dissatisfied investor has claimed Infogroup is making corporate filings using 'selective financial data that may not present an accurate picture of the value of the company' to justify its sale to CCMP Capital Advisors.

In early March Infogroup, the parent of researcher ORC, agreed to be acquired by CCMP for a total of around $635m, in a deal whereby shareholders would receive $8.00 in cash for each share of common stock.

However, later that month The Shareholders Foundation announced that an investor in the company had filed a lawsuit on behalf of Infogroup shareholders, alleging 'breaches of fiduciary duty by the Infogroup Board arising out of its attempt to sell the firm at an 'unfair price'.

The following month, two further investors also accused the firm's Board of attempting to sell the company at 'an irresponsibly low price'.

In a statement issued today Stonerise Capital Partners, one of the two making objections last month, said that in accepting CCMP's offer of $8 per share, Infogroup's Board of Directors relied on 'overly conservative projections, minimized the company's cost savings and potential for profit growth, and failed to appropriately consider the company's historical valuation as well as that of publicly traded comparables and similar transactions'.

Stonerise claims that the sale process appears to have been initiated following unauthorized communications by sacked former Infogroup Chairman & CEO Vinod Gupta - who owns about 36% of Infogroup's stock.

In a letter to the Infogroup Board, Stonerise Managing Partner Jose Medeiros says that the price of $8.00 per share was agreed to enable Gupta to sell his stock, and to 'put an end to' the firm's involvement with its former Chairman & CEO.

'This sale price represents no premium for investors or any noticeable acknowledgement of Infogroup's improved fiscal performance,' Medeiros adds. 'It goes without saying that we do not intend to vote our shares in support of this transaction, and we also believe that a material percentage of the company's shareholders share our view. We hope these investors will join us in our effort to preserve the shareholder value that the company seems intent on giving away.'

Last month, Medeiros claimed that recent sales of similar businesses were valued as high as $16.50 to $21.78 per share; despite the fact that Infogroup / infoUSA's actual share price last topped ten dollars a share in November 2007 and only stood above $14 briefly in the year 2000.

Web sites: www.infogroup.com and www.stonerisecapital.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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