Verticalnet: From $12 billion to $15 million
on 26 October 2007, 12:05
by Ken Schachter
Onetime dot-com darling Verticalnet, whose valuation soared to $12 billion during the 2000 tech bubble, has agreed to be acquired by a subsidiary of an Italian cement company for $15.2 million, the company said Friday.
News of the agreement triggered a sell-off of Verticalnet shares, driving down the price $2.62, or 47 percent, to $2.99, still higher than the sale price of $2.56 per common share.
Verticalnet, a maker of supply management software competing against companies such as Ariba and SAP, said it was being acquired by BravoSolution, a unit of Italcementi, which will assume Verticalnet debt and other liabilities.
Renaissance Technologies, a $37 billion hedge fund in East Setauket, New York, run by James Simons, had 460,701 shares worth $244,000 as of June 30, according to a government filing, making it one of Verticalnet’s largest shareholders.
In a statement outlining the reasons for the deal, Verticalnet said the company had hit a cash crunch, with $640,000 in cash on hand as of September 30 and $5.3 million in debt coming due within six months. Further, revenue for the quarter ended September 30 fell to a range of $3 million to $3.1 million from $4.2 million in the 2006 period, according to preliminary figures.
To remain independent, Verticalnet would have had to raise $10 million, the company said. After the sale, Nathanael Lentz, Verticalnet president and chief executive, is expected to run the North American operations of BravoSolutions.
Under terms of the deal, Verticalnet series B preferred shareholders who are not members of the board or part of management will receive $0.39 per preferred share. Members of the board and management who own series B preferred will receive $0.27. As part of the agreement, BravoSolution agreed to purchase series C preferred stock for $824,338, which will be used by Verticalnet for working capital.
Under the merger agreement, Verticalnet is allowed to seek alternative acquirers through November 19, but BravoSolution would get a breakup fee worth 5.99 percent of Verticalnet’s enterprise value plus expenses.
redherring.com |
