Marathon Group Opposed to Hoover's / Dun & Bradstreet Deal.
Dow Jones Business News
Marathon Group Opposed to Hoover's-Dun & Bradstreet Deal
Tuesday December 10, 2002
7:19 pm ET
WASHINGTON -- A group including Marathon Partners L.P. and investor Mario Cibelli said it's "vehemently opposed" to Hoover's Inc.'s pending acquisition by Dun & Bradstreet Corp. and that the $7 a share merger consideration is "grossly inadequate."
According to a Schedule 13D filed Tuesday with the Securities and Exchange Commission, the group holds a 9.02% stake in the company, with beneficial ownership of 1.4 million common shares.
At 4 p.m. EST Tuesday, shares of Hoover's were at $7, down two cents or 0.3%.
Last Thursday, Dun & Bradstreet agreed to acquire Hoover's for $7 a share or about $117 million. The acquisition is expected to close in the first quarter of 2003 pending regulatory approvals, customary closing conditions and the approval of a majority of Hoover's outstanding shares.
Hoover's directors, executive officers and certain other shareholders, collectively representing about 36% of outstanding shares, have agreed to vote in favor of the deal.
In a letter dated Monday and addressed to Hoover's Chairman and Chief Executive Jeff Tarr, Mr. Cibelli said the $7 a share deal violates the board's fiduciary obligation to maximize shareholder value.
"A back-of-the-envelope analysis using a multiple of 10x on the income plus the cash that will be on hand at that time implies a share price for Hoover's in the low $30s in 5 years," the letter said.
Mr. Cibelli said that while he would prefer that Hoover's remained independent, he wouldn't be opposed to selling the company. However, he said that he is "near certain" that Hoover's wasn't auctioned in an open competitive manner.
Mr. Cibelli asked if certain potential buyers, including Microsoft Corp. (NasdaqNM:MSFT - News) , Berkshire Hathaway Inc. (BRKA) and Yahoo! Inc. (NasdaqNM:YHOO - News) , were contacted.
In the letter, Mr. Cibelli said Hoover's has just now been able to enjoy the benefits of leveraging its fixed costs.
"The economy is in its third year of cost cutting by businesses and Hoover's managed to continue to grow throughout the entire period," the letter said. " Imagine how well the company was going to do as the next spending cycle started."
Mr. Cibelli said that even if the board felt compelled to sell Hoover's now, there are plenty of options available given the liquid balance sheet.
"The business is slimmed down, turned around, accelerating growth and poised for greatness," the letter said. "Financially, the balance sheet is strong with more cash being added everyday. All this in the company's favor, in a world of scarce ideas, and you and the board have hastily decided to sell out for $7 in cash without an open auction process."
Mr. Cibelli closed the letter, saying that he will make use of "any and all means" to fight for the rights of the shareholders.
A representative from Hoover's wasn't immediately available to provide further comment.
-Ben Siegel; Dow Jones Newswires; 202-628-7689
Dow Jones Newswires
12-10-02 1919ET
Copyright © 2002 Dow Jones. All rights reserved. |
