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Cibelli may make Hoover€™s bid

January 15, 2003

The Daily Deal /

Cibelli may make Hoover's bid
January 15, 2003
by David Shabelman

Hoover's Inc. investor Mario Cibelli faces a number of hurdles in halting D&B Corp. 's $117 million deal to buy the online business information provider.

Cibelli, principal at Marathon Partners , has enlisted Marlin & Associates LLC, a New York-based boutique consulting firm, to find an alternative to the $7-per-share bid from D&B. One option, which Cibelli has said he is considering, is mounting his own bid for the Austin, Texas-based company.

"We've tried jawboning the board into doing the right thing and walking away from the deal, and we've tried legal channels," Cibelli said. "But very quickly we realized there was one way to show the bid was too low, and that's for another entity to pay more."

Ken Marlin, founder and managing partner with Marlin & Associates, said his first priority is to find another strategic buyer to bid for Hoover's. If no potential acquirers surface, he said he will work with Marathon to raise capital to top the bid from Short Hills, N.J.-based D&B. Marathon owns 9% of Hoover's and is its third-largest shareholder.

Shareholders are scheduled to consider the deal Feb. 14. Marlin said he will try to convince the company's board of directors to put off the vote while he explores alternatives. "We understand the board is going to need a concrete reason to delay the vote," Marlin said. "We will be seeking to give them one."

Frank Milano, investor relations manager with Hoover's, said the board has a fiduciary duty to consider any superior proposal, while noting that the only offer on the table at present is D&B's.

Milano would not say whether other prospective buyers have approached the company since the D&B offer. Hoover's financial adviser, SG Cowen Securities Corp. , contacted a total of 18 companies to arrange a deal.

Any offer topping D&B's bid would have to cover a $5.7 million breakup fee stipulated in the merger agreement with Hoover's. That raises a minimum bid to about $7.37 a share, or $123 million.

D&B has the right to match any competing offer. According to Hoover's proxy statement, D&B has three days to respond to notification from Hoover's of a superior offer. The proxy also indicates the board believes it obtained the highest possible price from D&B, though it's unclear how D&B would respond to a competing offer.

"Clearly our offer would have to be higher than their $7 plus the breakup fee, and a little higher than that to make it clear to the board that they have a fiduciary responsibility to consider it," Marlin said. "We were not looking to do that, but it's something we're comfortable with doing."

Marlin estimated Hoover's value to be "at least $10 a share," or $167 million. Based on revenue projections, he expects the stock to approach $30 per share in a few years.

Marlin & Associates is an investment banking advisory firm focused on middle-market digital-information companies. It recently represented Capital Access International, a Morristown, N.J., provider of fixed-income analysis, which was purchased by London news service Reuters plc for $6.35 million.

Marlin spent 10 years as a senior executive with D&B, but he says he has no inside knowledge of the company that will help him in his efforts to overturn the Hoover's deal.

"It's a good move for D&B, a very good strategic fit," Marlin said. "We just do not understand why the board of Hoover's is insisting on selling the company now and insisting on selling at this price."

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