FWIW,
-----Original Message-----
From: Flip Filipowski [mailto:flip@divineinterventures.com]
Sent: Friday, April 14, 2000 7:19 AM
To: Undisclosed-Recipient:;
Subject: Fw: The May Report: 4/14/2000: By far this report's biggest scoop IFit is true.... CMGI in discussions to buy divine, possibly for $2.5 to$3B.
Well. What can I say except I continue to be amazed by this type of reporting. I suppose you all know and if you don't know then you should know that not a word of this is true. As of the moment I write you all this email there has been not a single discussion between CMGI and divine about acquiring the whole company. They continue to be in our S1 as an acquirer of nearly 5% of the stock of divine on the IPO but nothing more.
Amazing.
Flip
----- Original Message -----
From: Ron
To: The May Report
Sent: Friday, April 14, 2000 3:59 AM
Subject: The May Report: 4/14/2000: By far this report's biggest scoop IFit is true.... CMGI in discussions to buy divine, possibly for $2.5 to$3B.
April 14, 2000
The May Report
by Ron May
Your inside source on Chicago's high tech community
The May Report: 4/14/2000: By far this report's biggest scoop IF it is
true.... CMGI in discussions to buy divine, possibly for $2.5B to $3B.
++++++ Contact Information+++++
773.871.2000 x.1 or 312.670.6336 for Ron May
Claire Dolinar (executive assistant): 773.871.2000 x 2
773.871.4933 (Fax).
For personal & confidential 312.670.6336
E-mails to ronaldmay@aol.com or ron@themayreport.com
________
Advertising or business issues:
Available space to get your message across to more than 10,000 subscribers.
Call Paul May @ 312.782.0100 x 14 or e-mail paul@themayreport.com.
Include your phone number please.
+++++++++++ website +++++++++++
If you are a new reader or want to research Chicago High-Tech,
entrepreneurs, high tech firms, dot coms, VC's, angels, and the movers and
shakers, go now: themayreport.com. Our Archives have many of the
past reports and there is no charge.
+++++++
SUBSCRIBE / UNSUBSCRIBE REQUESTS:
Changes to the distribution list are processed every Tuesday and Friday.
The format below will help us expedite your requests:
For subscribe or change of address requests: subscribe@themayreport.com
Unsubscribe requests should be sent to: unsubscribe@themayreport.com
++++++++ EVENTS +++++++++
send to events@themayreport.com or claire@themayreport.com with
events in the subject line.
+++++++++++++++
We are proud to announce that The May Report's new job center is up and
running with over 200 positions posted.
themayreport.com
Sponsorship: Altheimer & Gray
Come to a discussion about Chicago and e-business ð 3:00 p.m. Thursday, May
4. Speakers: David Weinstein (BlueMeteor), Robert Bernard (marchFIRST),
Bill Lederer (Minotaur), Brad Keywell (starbelly.com) and Philip Summe
(Flatiron). Where: Fairmont Hotel, 200 N. Columbus. For more information,
go to www.altheimer.com. Sponsored by Altheimer & Gray ð We connect the dot
coms.
______________________
Sponsorship by Forward:
Move Forward: ISPs and computer network professionals use Forward.Net
for Internet Access by DSL, ethernet, leased lines and all digital
dial-up. Servers, websites clients and companies connect with
Forward.Net. Will Cotter (877/773) 395-0023 x106, will@forward.net
|||||||||||||||||||advertisement|||||||||||||||||||||||
>----------------------------------------------------------------------------
>-------------------------------
>Internet Executives Club presents an executive networking breakfast with
>Howard Tullman, co-founder of Tunes.com, Chairman, The Cobalt Group,
>operating partner, Pario Ventures L.P. Venture Fund. May 18th. Sponsors:
>Deloitte & Touche, Equis, Email jarart@msn.com now for info. Mention ad.
>----------------------------------------------------------------------------
>-------------------------------
|||||||||||||||||||advertisement|||||||||||||||||||||||
There is only one way to do this --- just tell it, all the facts and my
sense of them, just as they happened.
About 7:15 p.m. Thursday evening, just as I was ready to send out an
article, I got a call. The caller said he wished to remain anonymous. He
told me that he knows me, and that we have met at various meetings, and
that I know him well enough not to ask for his card.
He started by joking about how he had a story about the company I love to
hate, or words to that effect. I was cagey and did not even use the name
Flip or divine. We both knew who he was talking about. Then he told me what
he had heard.
Here is exactly what he said: 1. He heard from a large investor in CMGI
that CMGI is going to buy divine and that this is the reason there is no
last minute S-1 filing; 2. That Flip will cash out with $80MM to $100MM
profit on his money; and 3. That they are waiting for an uptick in the
market to announce it.
He added that $80MM to $100MM profit is "not bad for nine months' work." I
had told him that Flip put in $20MM, so that means that the multiple on the
initial investment is five to six.
I asked him about the reliability of his source and he said that the guy is
very reliable, but he did encourage me to check around and see what I can
find out. He seemed a bit concerned that I should not publish the
information until I got some confirmation.
He said that the guy who told him is "long in the tooth." I asked him what
that meant just to be sure there was no misunderstanding and he said the
guy had been around for a long time in technology and that the deal is all
but done.
Then, at 10:44 p.m., I got this call on my voice mail: "Thought you would
like to know that divine interventures is talking with CMGI and it is
called a sale and it is pre-IPO. FYI. My name's xxx." I did not recognize
the name, and he only gave what appeared to be his last name.
The second call in three and half hours sealed it. I have to go with it, at
least as a strong rumor. If it is true, it is by far my greatest scoop
ever, but it is funny, I am not thinking about "scoops" right now. Those
are the facts. The rest is commentary and analysis. Why should I decide to
become a journalist now? Why separate the two when you can mix them up all
in one sentence?
_____________________
I am actually nervous and in a state of shock as well as a having a sense
of sadness. I am filled with an empty feeling, almost numbness. Where does
this leave us in Chicago high tech?
I did some number crunching. If you put in $20MM and get $100MM or $120MM
back, that means the overall deal is for about $2.5B or $3B which seems to
me to be in the ballpark. A stock price of $7 for about $500MM initially
invested in divine would put divine's market cap at about $3.5B or seven
times the money in, just a little more than my caller indicated this deal
would go down for. That $7 figure is antediluvian.
If it is a stock swap, CMGI has market cap of about $18.54B, so they should
be able to afford it. Saying something like that is well beyond my scope of
knowledge.
At one level this rumor, if true, runs so much against the grain. You ask
yourself: Why would Flip do this? Isn't this so much the opposite of what
he has been trying to build in Chicago? Isn't this a case of premature you
know what? Why this when the people at divine have been working 18 hour
days to make their own IPO successful? Where would this leave the people of
divine, the average Joe?
All of this goes through my mind: the hometown pride factor, the divine
build-up, the name, the marketing, the zaibatsu philosophy, the many local
firms they have funded, the huge number of people they have hired, the
involvement level of so many key local players, the commitment of the Mayor
and the Governor, the sense of excitement and daily fascination that has
accompanied this. Something to be proud of as a Chicago high tech success....
Then I think, CMGI just bought uBid and YesMail. CEOs Greg Jones and Dave
Tolmie are both on Flip's board and both are buddies.
Is there a fear factor that could be driving this? I think of Flip's famous
shower and his feeling of sheer terror. I think of the initial impetus
behind the expansion of Platinum, the first company Flip went out and
bought and then the next forty, ultimately to be seventy. That was driven
at first by a realization that the DB/2 market was dying.
The last couple of weeks has struck fear in the hearts of any internet
entrepreneur.
I have to report this because if I do not and it turns out to be true, I am
doing a great disservice to you, members of the Chicago high tech
community. If it turns out to be false, everyone can sigh relief (one would
think) and all that has happened is that a high level of "buzz" has been
generated.
I think of it this way: if I am an employee at divine who is busting my
butt every day to make things happen, I would sure want to know about this
before it becomes a surprise announcement.
Trust me: divine employees do not know. In fact, I would be surprised if
more than a handful of people there do know. Flip, Mike and Paul plus maybe
Larry Freedman, their internal lawyer.
My reluctance to publish this rumor has more to do with my own
disappointment and shock by it than the possibility that it is true. At one
level it gives me goose bumps because I believe in Chicago high tech at the
bottom of my heart. This leaves us, well .... you know.
All my yapping aside, I really do hope that divine will be a big success.
It is our company. It is a Chicago creation, top to bottom. Who in Chicago
high tech doesn't know dozens of people who work for divine, one of their
portfolio firms, or one of their investors or service vendors? I personally
know three hundred or more of them.
All the hopefulness aside, there is hard reality and that hard reality has
come home in the last week. Then the pure business hat has to be put on.
Perhaps the deal makes sense. The pullback in the IPO share offering was
the first sign of fear and retrenchment --- driven by the fear of ravages
from the public market.
I hope that Flip is thinking about his people and not just his investors
though. It would be a great disappointment to realize that this is a
selfish move, if it turns out to be that. He has almost a cult following in
the firm and there is a high sense of comraderie.
CMGI is trading at $66, not far above its 52-week low. The 52-week range
has been $33 to $163. The price of the stock is now down to where it was
around the 20th of November. So, CMGI has taken a huge hit this month
alone. It was close to $150 in early March and hit its peak in early January.
Does CMGI's low stock price work in favor of the deal? That was Greg Jones'
argument with the sale of uBid. Also, if divine's "comps" are CMGI and ICG,
where does that leave divine's stock when it does go public.
CMGI has a market cap of $18.54B, down a good $15B to $20B from its high.
By the way, I just went on Raging Bull looking for any rumors about this deal.
Here is the link to that page:
ragingbull.com
CMGI's volume was quite high yesterday: 9.76 million versus an average of
7.35 million. It was also the most active stock on the Raging Bull
discussion board yesterday.
We have no idea what the bankers and the analysts have been telling Flip in
the last week. We have no idea how much support divine has or has not been
getting in the market.
I am crossing my fingers and hoping that whatever happens, it turns out for
the best and to be the right thing to do.
|||||||||||||||||||advertisement|||||||||||||||||||||||
Recently named as one of Inc. Magazine's 500 fastest growing private firms
in America and Crain's Chicago Business Top 10 Executive Search Firms, David
Gomez & Associates specializes in recruiting and placing professionals of
the highest caliber. Our client, one of the top international management
consulting firms in the country, is seeking a Senior Consultant with
partnership potential to join their rapidly growing, industry leading
Internet/e-Biz practice (Chicago based). This person will be leading
engagements in B2B and B2C arenas, working with CEO and Board level
executives. Must have exceptional interpersonal and communication skills,
high level of innate intelligence, well developed knowledge of the "space",
high energy, and consultative orientation. Strong track record and at least
10 years experience required.
Exceptional cash compensation and equity potential. ($300k-$500k range)
Please forward resumes and inquiries to:
David Gomez & Associates
dgomez@dgai.com <mailto:dgomez@dgai.com>
20 N Clark Ste 3535
Chicago IL 60602
www.dgai.com <http://www.dgai.com>
312-346-5525 (phone)/312-346-1438 (fax)
||||||||||||||||||||||||||advertisement||||||||||||||||||||||||||| |
