Cannae Holdings and Senator Investment Group continue to forge ahead with their unsolicited $7 billion takeover bid of property and data analytics company CoreLogic.
On June 26, Cannae and Senator — who jointly own or have an economic interest equivalent to approximately 15% of CoreLogic’s outstanding common stock — offered to buy CoreLogic for $65 per share in cash. CoreLogic rejected the bid, calling it an “opportunistic proposal” that “significantly undervalued” the company. The investors then threatened to replace CoreLogic’s board, and CoreLogic issued another rejection of the bid.
This morning, the two firms issued an open letter to fellow shareholders announcing that they have initiated a process to call a special meeting of shareholders to elect nine “independent and highly accomplished directors” to the CoreLogic board of directors. Their goal is to replace the majority of the board with “nominees who will act in best interests of shareholders” who have no affiliation or association with Senator, Cannae, or any of their affiliates.
Those nominees include:
- W. Steve Albrecht, the Gunnel Endowed Professor in the Marriott School of Management at Brigham Young University and former chairman of Cypress Semiconductor
- Martina Lewis Bradford, founder, president, and CEO of Palladian Hill Strategies, a government relations firm
- Gail Landis, founding partner of Evercore Asset Management, where she served as managing principal from 2005 until 2011. She has been on the board of Morningstar since 2013
- Wendy Lane, who has served as chairman and founder of Lane Holdings, an investment firm, since 1992
- Ryan McKendrick, the former president and CEO of AMCOL International
- Katherine “KT” Rabin, who served as CEO at Glass, Lewis & Co., a provider of global governance services, from 2007 to 2019
- Sreekanth Ravi, co-founder and executive chairman of the board of RSquared, a cloud-based artificial intelligence (AI) platform in the workforce intelligence market
- Lisa Wardell, chairman and CEO of Adtalem Global Education, a workforce solutions provider Henry W. “Jay” Winship, president and founder of Pacific Point Capital, a real estate investment firm
Cannae and Senator also reiterated they were disappointed in CoreLogic’s response to their bid – in particular by the company’s “scorched earth defense, series of defensive maneuvers and unwillingness to engage in good faith.”
However, they did say that while they still believe the $65 per share offer is compelling for shareholders, they are “open-minded on value subject to diligence.”
Cannae and Senator said they wrote privately to the CoreLogic board, inviting the company to demonstrate why they should offer more by providing them with access to due diligence materials.
“That process would permit us to understand product-level profitability and growth,” they said. “CoreLogic rejected that opportunity, choosing instead to immediately publicly announce that it was turning us down again.”
The firms also claim to have received “widespread support” from other shareholders. Cannae and Senator also allege that CoreLogic increased the company’s share count intentionally in order to dilute their ownership below the 10% threshold required to call a special meeting.
Among their other allegations are that CoreLogic has incited regulatory scrutiny and obfuscated organic growth “in order to support aggressive projections,” among other “delay tactics.”
They added: “If these are not just delay tactics, the Company has the opportunity now to promptly call a Special Meeting in early October – the date shareholders could have reasonably expected a meeting before the Company began all of this gamesmanship. We suspect they will not…We sincerely hope we can find common ground with CoreLogic. But if we cannot, we remain committed to the transaction and allowing shareholders to vote and decide for themselves.”
In response, CoreLogic issued its own statement on Wednesday, maintaining its previous positions.
Specifically, Chairman Paul Folino said the CoreLogic board continues to believe Senator and Cannae’s proposal “significantly fails to provide appropriate value” to its shareholders and does not reflect the company’s “strong” multi-year outlook for the business.
He added: “Since their June 26 proposal we have increased our 2020 earnings guidance by more than 15% and issued strong guidance for 2021 and 2022. Our outlook is supported by contracted revenue, continued efficiency improvements and our transformed, less-cyclical business mix, which will be further enhanced by our recently announced planned divestitures of two lower-margin businesses.”
CoreLogic claims that Cannae and Senator’s proposal also does not account for the company’s “substantial return of capital,” including a 50% dividend increase and repurchase of $1 billion of shares by 2022.
Folino concluded: “…our Board is unanimous and highly confident in its belief that CoreLogic will be able to deliver significantly more value to shareholders than this opportunistic proposal. We will continue to provide full transparency into our business so all our shareholders can participate in CoreLogic’s substantial value creation potential.”