Infogroup shareholders voice opposition to private equity takeover

Hotchkis & Wiley Capital Management, the firm’s second-largest shareholder with a 5.7% holding, says the proposed transaction price “is a steep discount to Infogroup’s fair value”.

In a letter to the board, portfolio manager Noah Mayer said: “We are confident that under the leadership of [CEO] Bill Fairfield’s team the fundamental value of Infogroup is well in excess of $12 per share.”

Stonerise Capital, with a 2.5% stake, prices the firm higher at between $16.50 and $21.78 per share. It says $8 a share is “an irresponsibly low price”. The investor group says it is “considering all our legal and business alternatives” to the sale.

Both Hotchkis & Wiley and Stonerise take issue with the timing of the sale, pointing to signs of recovery in the business in the aftermath of what Stonerise calls “the worst operating environment [Infogroup] has ever
lived through”.

Reporting its 2009 results in February, CEO Fairfield said Infogroup had made “good progress in uncertain times” – citing the consolidation of its disparate businesses, the sell-off of the non-core social research business Macro International and a reduction in debt levels of $120m.

Fairfield said the foundations had also been laid for single-digit organic growth in 2010, whereas in the past the company had relied on growth through acquisitions.

Hotchkis & Wiley’s Mayer said: “While [the $8 a share] valuation based on current performance is attractive, current performance does not reflect the full potential of this asset under its current leadership.”

Infogroup – owner of Opinion Research Corporation – agreed to be bought by CCMP Capital Advisors in March. The total value of the deal is $635m, including the refinancing of InfoGroup’s debts.

Fairfield said at the time the deal was announced that the CCMP approach offered shareholders “an attractive, immediate and certain cash value for their shares”.

The acquisition is expected to be completed in the summer, subject to the approval of Infogroup shareholders and regulatory approvals.