CoreLogic, a ubiquitous purveyor of real estate data and software, has spent the last month fending off an increasingly bitter multi-billion dollar acquisition attempt from two investment firms.
And the reason behind the rejection may sound familiar to real estate professionals: The company believes the would-be buyers’ offer is too low.
The saga has steadily escalated since it began on June 26, when investment companies Senator Investment Group LP and Cannae Holdings Inc. made an unsolicited bid to buy CoreLogic. The two firms offered $65 per share.
In a letter to CoreLogic — which was published by Bloomberg — Senator and Cannae said the offer represented “approximately $7 billion in total enterprise value.” The letter also noted that together the two investment companies already owned or had an economic interest in about 15 percent of CoreLogic’s outstanding common stock.
Ultimately, Senator and Cannae made the case in the letter that the acquisition was “in the best interest of all stakeholders” and that they would “seek to reignite growth at CoreLogic, increase operating efficiency, and improve overall allocation of scarce capital resources.”
CoreLogic, however, disagreed. In a statement issued a week and a half later, the company revealed that its board had unanimously rejected the “opportunistic acquisition proposal.”
“CoreLogic’s Board of Directors unanimously concluded that the unsolicited proposal significantly undervalues the company, raises serious regulatory concerns, and is not in the best interests of its shareholders,” the statement explained.
Paul Folino, CoreLogic’s chairman of the board, also said in the statement that the company has “strong momentum, increasing margins, accelerating growth,” and other positive traits.
Folino additionally raised the specter of problems due to the fact that Cannae’s chairman is Billy Foley, who is also the chairman of data company and CoreLogic competitor Black Knight.
The letter that Senator and Cannae sent to CoreLogic repeatedly mentions Foley, but describes him as a “uniquely qualified buyer who would strengthen the business to benefit all stakeholders.”
The proposed deal could simply have fallen apart after CoreLogic rejected it. Instead, it grew more bitter.
In response to the rejection, the two investment firms published a statement on July 7 blasting CoreLogic for rejecting “our proposal without any sign of seriously considering it.” The letter also accused CoreLogic of “refusing to engage with us, and now adopting a poison pill while summarily rejecting our proposal with the typical smokescreen of regulatory concerns and overly optimistic multi-year projections.”
The statement further called the regulatory concerns “nothing more than misdirection” and claimed CoreLogic has had “years of poor organic growth.”
Senator and Cannae additionally upped the ante by threatening to replace CoreLogic’s board of directors.
“If CoreLogic elects to ignore its shareholders and instead continues with its current course of action, we will call a Special Meeting to replace the board as early as July 28th,” the statement added.
On July 14, the Federal Trade Commission (FTC) notified CoreLogic that it was investigating the proposed deal. The investigation is mentioned in a brief note filed with the U.S. Securities and Exchange Commission, though the note doesn’t provide details about the investigation’s focus beyond saying regulators have asked CoreLogic for information.
The latest salvo in the conflict came Monday, when CoreLogic said in a statement it wouldn’t turn over private financial information in response to the investment firms’ request for due diligence.
“The CoreLogic Board will not provide non-public information to Senator and Cannae unless they first raise their offer to a level that provides appropriate value to our shareholders,” the statement noted.
The statement also said CoreLogic will counter any attempts to replace its board.
Speaking with Inman Thursday, a source with knowledge of the situation — who spoke on the condition of anonymity — said that as things currently stand Senator and Cannae are likely to move forward with the special meeting that is intended to replace CoreLogic’s board. The source also said the two firms are unlikely to raise their offer without CoreLogic completing the due diligence they asked for.
Cannae and Senator declined to comment to Inman for this story. CoreLogic referred Inman to its published statements.
For now it consequently remains to be seen where the conflict goes next. However, given the consistent escalation that has taken place over the past month, it seems unlikely either side will be ready to back down soon.
Update: This story was updated after publication with additional comments from a source that has knowledge of the situation, and with information about an FTC investigation.