Infogroup Urges Stockholders

Database giant and ORC parent Infogroup has sent a letter to shareholders recommending that they vote in favour of the firm's sale to private equity firm CCMP Capital Advisors, at a special meeting to be held on June 29.

Infogroup's Board unanimously agreed to be acquired by CCMP in March, for a total of around $635m, including refinanced debt. The deal would provide shareholders with $8.00 in cash for each share of common stock, but a number of investors have complained that the firm is attempting to sell at an 'irresponsibly low price'.

In the letter sent to stockholders today Gary Morin, Chairman of the firm's independent M&A Committee, said that the Board of Directors unanimously concluded that CCMP's $8.00 per share cash offer is in the 'best interests of the company and its stockholders'.

He adds that the offer represents a premium of approximately 22% to Infogroup's $6.56 per share price at the close of market on October 30, 2009, the last trading day prior to press reports regarding a potential acquisition.

Members of the M&A Committee were appointed following stockholder litigation that resulted in the sacking of former CEO Vinod Gupta in 2008, after he was found guilty of improperly using nearly $9.5m of company money.

Gupta still owns about 36% of Infogroup stock, and Morin explains in the letter that the Board's decision to establish the M&A Committee was one of several steps taken to minimize the 'disruptive impact' that Gupta's actions might have on the process for evaluating alternatives for maximizing stockholder value.

After considering a wide range of alternatives - including a strategic merger, a restructure to focus on digital technologies, divestiture of non-core and underperforming assets, and continuing as an independent company - the M&A Committee recommended the Board pursue a sale process.

'As part of the sale process, Infogroup engaged with more than 50 potential strategic and financial buyers, which resulted in 11 preliminary proposals and only two final proposals to acquire the company,' Morin says. 'The Infogroup Board, with input from its advisors, determined that CCMP's proposal was superior to the alternative proposal in terms of price and certainty of closing and unanimously recommended in favor of the CCMP transaction.'

Morin adds that the Board believes that the CCMP deal removes 'substantial operation and financial risk' that would be present if Infogroup was to continue as a standalone firm.

This, he says, is based on Infogroup's 2010 financial underperformance, its historic inability to meet its budget, and the increased level of competition in the market.

Web site: www.infogroup.com .

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

• Infogroup | ORC
• All news