Infogroup’s 3rd-largest shareholder says proposed sale price for database provider is too low

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Infogroup investor blasts proposed sale price

OMAHA, Neb. — An investment firm that holds nearly 6 percent of Infogroup’s stock says the database provider’s proposed sale to private equity firm CCMP Capital Advisors is priced too low, according to documents released Tuesday.

Hotchkis and Wiley Capital Management sent a letter to Infogroup’s board on Monday complaining that CCMP’s roughly $460 million offer significantly undervalues Infogroup Inc., which is based in Omaha.

“We think this is just an appalling outcome, and shareholders recognize this,” portfolio manager Noah Mayer said Tuesday.

CCMP is offering $8 per share of Infogroup, and Infogroup’s board has unanimously recommended that shareholders accept it. A date has not been set for the shareholder vote.

Infogroup shares rose 4 cents to $7.90 in afternoon trading Tuesday.

Mayer said Hotchkis and Wiley sent its letter to register displeasure and explain why it’ll be voting against the deal even if it might ultimately be outvoted.

Los Angeles’ Hotchkis and Wiley is Infogroup’s second-largest shareholder with 5.7 percent of the stock. Infogroup founder Vinod Gupta controls more than 35 percent of the stock, and he supports the deal.

Another investment manager, Cardinal Value Equity Partners, controls about 5.6 percent on Infogroup’s stock. Cardinal officials declined Tuesday to comment on the CCMP deal.

Infogroup spokeswoman Lisa Olson declined to comment on Hotchkis and Wiley’s letter. Officials at New York-based CCMP also declined to comment Tuesday.

Gupta resigned from Infogroup’s board right after voting to recommend the CCMP deal last month, and he recently agreed to pay more than $7.3 million to settle an SEC investigation into the way he used more than $9 million of Infogroup’s money to support an extravagant lifestyle.

Gupta was the chief executive and chairman of the company, which used to be known as InfoUSA, from 1992 through August 2008. He stepped down as part of a settlement of a shareholder lawsuit, which was filed by Cardinal and a hedge fund. The lawsuit alleged that Infogroup misspent millions of dollars, some of it on domestic and international air travel for former President Bill Clinton and his wife, then-Sen. Hillary Rodham Clinton.

Mayer said in the letter he is confident Infogroup is worth more than $12 per share under current management. Hotchkis and Wiley acquired its shares at an average price of $6.23 per share and planned to hold them.

“We believe that the low transaction price reflects a deeply flawed sales process,” Mayer said in the letter, which was filed with the Securities and Exchange Commission on Tuesday.

Mayer said it doesn’t make sense to sell Infogroup to a private equity firm because the company could command a higher price from a buyer that has a strategic interest in InfoGroup’s databases.

And he said there isn’t an urgent need to sell Infogroup now when it is still in the early stages of recovering from a long period of mismanagement.

On the Net:

InfoGroup Inc.: www.infogroup.com

CCMP Capital Advisors LLC: www.ccmpcapital.com

Hotchkis and Wiley Capital Management: www.hwcm.com