CoStar has offered to pay CoreLogic shareholders $6.00 per share in cash, in addition to its previous offer of 0.1019 shares of CoStar Group common stock in exchange for each share of CoreLogic common stock.
The revised bid could threaten the acquisition offer that CoreLogic has already accepted from private equity firms Stone Point Capital and Insight Partners, which values the company at $80 per share.
This offer was itself considered to be a substantial mark-up on an earlier $65 per share offer from investors Senator and Cannae that CoreLogic rejected in July 2020.
However, the extra $6.00 per share terms of CoStar’s bid seem designed to offset volatility in the company’s share value, which CoreLogic says has declined 19%, or $177 per share, since the time of CoStar’s original offer.
CoreLogic therefore notes that the revised offer represents “a significantly lower implied total per share value” than the first offer.
However, the firm still recognises the bid as a superior offer to its agreement with Stone Point and Insight, and has expressed interest in a deal if CoStar is willing to improve both the value and the certainty of the value of its offer, as well as the certainty of the closing time for a potential deal.
As it stands, an acquisition by CoStar would entail an antitrust period of 15 months, during which time CoreLogic is concerned that the value of CoStar’s shares could decrease further.
“Any new proposal should deliver increased, more certain value and as much cash consideration as possible,” CoreLogic CEO Frank Martell wrote in a letter to CoStar.
“We would note again that CoStar and the combined business would have sufficient capacity to finance all or a majority of the transaction in cash (with the potential for public equity offerings to further that capacity), and a material increase in the level of cash consideration as part of a transaction would improve the strength of your Updated Proposal.”
CoreLogic also stressed that the merger agreement with Stone Point and Insight is still “in full force and effect”, although it remains subject to shareholder approval.
Evercore is serving as financial advisor to CoreLogic and Skadden, Arps, Slate, Meagher & Flom LLP is serving as the Company’s legal advisor.
Last year, CoreLogic was embroiled in a months-long battle with investors Senator Investment Group and Cannae Holdings after it rejected a $65 per share acquisition offer.
Senator and Cannae accused CoreLogic of acting against the interests of shareholders and tried to oust members of the CoreLogic board. However, in October CoreLogic was vindicated after receiving multiple acquisition offers that valued the company at or above $80 per share.
But the drama could now be set to continue if either CoreLogic’s Board or its shareholders decide that new offer from CoStar is preferable.
Founded in 1987, CoStar is a provider of commercial real estate information, analytics and online marketplaces.