Shares of Corelogic shot up 23% on Friday morning in response to an unsolicited takeover bid from two of the company’s significant investors, Cannae Holdings and Senator Investment Group.
In a letter to the Corelogic Board of Directors, Cannae and Senator — who jointly own or have an economic interest equivalent to approximately 15% of CoreLogic’s outstanding common stock — describe the all-cash proposal as representing “a premium that is 37% in excess of CoreLogic’s unaffected stock price and 34% in excess of the company’s 30-day volume-weighted average price.”
Cannae is led by Bill Foley, the chairman of Black Knight, a data and analytics company that directly competes with CoreLogic. Foley, whom the letter calls “a uniquely qualified buyer,” has a long track record of operating, acquiring and investing in information and technology businesses in the financial industry. Foley served as CEO of Fidelity National Financial from 1984 to 2007, as well as the executive chairman of Fidelity National Information Services, or FIS, from 2006 to 2011.
Cannae and its affiliates propose to acquire 100% of the outstanding shares of CoreLogic for $65 per share in an all-cash transaction. The letter states that “Cannae expects to finance the transaction and its related fees and expenses with a combination of equity investment that has already been spoken for in the amount of approximately $3.6 billion and third-party debt financing.”
The letter makes mention of the recent action by CoreLogic that raised their second quarter guidance on June 25. A CoreLogic press release stated: “The Company expects second quarter 2020 financial results to exceed previously issued revenue and adjusted EBITDA guidance ranges driven principally by continued market share gains and operating leverage attributable to higher U.S. mortgage market volumes.”
In the letter from Cannae and affiliates, they posit that CoreLogic’s action “was a defensive move in light of the high trading volume and knowledge of our interest in the Company.”
Although the letter states that Cannae and Senator are “optimistic that we can still engage constructively with the Board,” they warn that they are “committed to this transaction.”
“Senator has conducted a thorough study of the Company’s governance documents and the remedies available to all shareholders and is prepared to exercise our rights, including by calling a special meeting and soliciting proxies, for the benefit of the Company’s shareholders should that be necessary,” the letter states.
In March, law firm Sullivan & Cromwell wrote that corporate boards should prepare for an uptick in activist investor activities as a result of the upheaval caused by COVID-19, but pointed to share price and economic volatility as the driver of unsolicited bids. This scenario appears to be unique as the company share price was trading at 52-week highs prior to the unsolicited offer.
As most public companies do, Corelogic has specific anti-takeover provisions in their bylaws to discourage certain types of transactions including threatened acquisitions involving coercive takeover practices and inadequate takeover bids.
HousingWire has reached out to CoreLogic and will update this article if the company provides any comment.