More Investors Oppose Infogroup Sale

The sale of database giant Infogroup has been opposed by two further investors, who accuse the firm's Board of Directors of attempting to sell the company at 'an irresponsibly low price'.

Infogroup, the parent of research agency ORC, agreed to be acquired by CCMP Capital Advisors in March for a total of around $635m. If the deal proceeds, the company's shareholders will receive $8 in cash for each share of common stock.

However, as soon as terms of the sale had been finalised, The Shareholders Foundation announced that an investor in the company had filed a lawsuit in Nebraska State Court on behalf of current shareholders, alleging 'breaches of fiduciary duty by the IUSA board arising out of their attempt to sell Infogroup via an unfair process and unfair price'.

On Monday, investor Hotchkis and Wiley Capital Management - which owns nearly 6% of Infogroup stock - sent a letter to the firm's Board, complaining that CCMP's offer 'significantly undervalues' the company.

The firm was joined by a second investor, Stonerise Capital Partners, which said yesterday that it believes the sale is being forced by company founder and former CEO, Vinod Gupta, to help him pay the $7.4m fines levied for his misuse of nearly $9.5m of company money.

Stonerise - which holds shares representing around 2.5% of Infogroup's outstanding common stock - said it is considering 'legal and business alternatives' to the sale.

In a letter to the Infogroup's Board dated April 6, Stonerise management said it believes the proposed sale fails to capture the long-term standalone value of the company, and instead, is being used as an instrument to provide liquidity for Gupta, who holds 36% of the stock, at the expense of other investors.

Jose Medeiros of Stonerise said that recent sales of similar businesses were valued as high as $16.50 to $21.78 per share; roughly a 120% difference from the $8 offered for Infogroup shares. The actual share price of the company (previously infoUSA) last topped ten dollars a share in November 2007 and only stood above $14 briefly in the year 2000.

'Any responsible Director would recognize that this is not the right time to sell and $8 per share is far from the right price,' stated Medeiros. 'They should have declined the anemic offers and simply re-evaluated a sale in the future when the full benefits of management's ongoing restructuring efforts were evident.'

Medeiros claims that the $460m offer price represents a 2% discount from where Infogroup shares were trading prior to the sale announcement.

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.

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