It's been a roller coaster kind of ride lately, following the events surrounding the proposed sale of Hoover's, the Austin, Texas-based company that calls itself "The Business Information Authority." The company had signed a deal to be acquired by D&B. But, the ride recently got more exciting with an on-again, off-again lawsuit, a counterproposal made and then abruptly withdrawn, and a delayed shareholders' meeting.
In early December 2002, D&B made a $7 per share purchase offer for Hoover's (http://newsbreaks.infotoday.com/nbreader.asp?ArticleID=17027). The deal has been surrounded by controversy since the announcement. Some investors and analysts were critical of the low purchase price, saying Hoover's was giving away the company. Statements and counter statements flew on either side of the deal.
Hoover's shareholders were due to vote Feb. 14 on the acquisition, but this was complicated by a lawsuit that sought to block the purchase and, surprisingly, by a competing bid submitted on Feb. 6 for $8 per share, or 14.2 percent higher. Marathon Partners, a 9 percent shareholder, teamed up with technology investor Austin Ventures to fight the D&B purchase with the higher offer.
Following this proposal, D&B said it would not raise its bid. Allan Z. Loren, chairman and CEO of D&B, stated: "We believe Hoover's is a natural fit for D&B. However, we conducted our due diligence in a disciplined manner over many months, and we concluded that to pay more than our most recent offer would not be in the best interests of our shareholders. As a result, we decided we will not raise our offer to acquire Hoover's."
Hoover's announced that it would "convene, but immediately adjourn," its Special Meeting of Stockholders scheduled for Feb. 14—which, in fact, it did—and reconvene it on March 3, 2003. Hoover's also said Marathon Partners had agreed to dismiss its pending lawsuit against the Company and its directors.
Then, on Feb. 12, Austin Ventures and Marathon abruptly withdrew its competing bid, making it more likely the D&B deal would go through. It sure looks as if the lawsuit and bid were just designed to drive the purchase price higher. And, it looks like D&B called their bluff, as one observer noted.
Analysts from Outsell commented in a recent newsletter that, "The bid could have been simply an attempt to test the value of the stock." Further, the research and advisory firm noted that, "The result is consistent with Outsell's earlier conclusion that D&B's valuation of Hoover's was correct."
So, the shareholder's vote on the D&B acquisition is still scheduled for March 3. Stay tuned. It's hard to say what could happen in the meantime or how shareholders will actually vote. Outsell noted that, "among the wild cards are Warner Books Multimedia and Media General, with 17 and 15 percent shares, respectively." And, Marathon's managing member, Mario Cibelli, who thinks the D&B offer is "grossly inadequate," reportedly told Dow Jones Newswires after the withdrawal of their offer, "Our position on the company and the deal hasn't changed."