New Catalina Suitor Trumps ValueAct Bid

Catalina Marketing has agreed to be acquired by private equity investment firm Hellman & Friedman for $32.50 per share in cash. The agreement means the termination of an earlier deal with its major shareholder ValueAct Capital, which in consequence will receive an $8.4m fee.

The news comes one week inside the 45 days allowed at the time of the ValueAct deal for negotiations with other parties. The all-cash transaction is valued at $1.7 billion, including the assumption of c.$136m of current indebtedness. The amount per share is $0.40 higher than the price agreed with ValueAct Capital on March 8 (www.mrweb.com/drno/news6541.htm ). In accordance with the best Old Testament principles, the new agreement requires Catalina to pay a much higher figure - $50.6m – if it finds a third buyer and terminates the deal with Hellman & Friedman before the vote can take place.

The new deal has been agreed and recommended to stockholders by the firm's special committee and the entire board of directors with the exception of ValueAct principal Jeffrey W. Ubben, a non-participant due to the earlier deal. If approved, the transaction is expected to be completed in the third quarter of 2007.

The merger can count on votes representing 2.9 million shares from Chairman of the board Frederick W. Beinecke, with an affiliate company Antaeus Enterprises; and ValueAct's 7.2 million shares in accordance with a previously signed agreement. Beinecke commented: 'We are pleased that we were able to negotiate additional value for our shareholders during the period following the signing of the ValueAct agreement. Our management remained focused on the business while simultaneously doing an excellent job in working with a variety of potential alternative purchasers.'

Hellman & Friedman MD Andrew Ballard says Catalina is 'uniquely positioned', with innovative products, strong cash flows and a world-class management team. Catalina CEO Dick Buell comments: 'Hellman & Friedman will be an excellent partner for Catalina. They are knowledgeable professionals that understand our business, and importantly, support our long term growth strategy to serve our customers with our unique and superior marketing solutions.' Buell said in March that going private will allow the company to invest aggressively in pursuit of long-term goals, free of the fear of 'Wall Street backlash'.

Catalina's proposition is based around getting dynamic access to consumers at the point of sale and delivering targeted marketing messages based on insight into their behavior, with services including promotional messaging, loyalty programs and direct-to-patient information. The company, which is based in St. Petersburg, FL and had revenue of $123.1m in the latest quarter, is online at www.catalinamarketing.com .

Hellman & Friedman LLC has offices in San Francisco, New York and London and is online at www.hf.com . Founded in 1984, it has over $16 billion of committed capital and closed its sixth fund only yesterday with a value of $8.4 billion. Its investments include DoubleClick, Young & Rubicam, Digitas Inc, The Nielsen Company, Axel Springer AG and the Nasdaq.

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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