Corelogic (CLGX) Responds to CoStar (CSGP) Regarding its Revised Acquisition Proposal, Says Updated Proposal Requires Further Improvement
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CoreLogic (NYSE: CLGX), a leading global provider of property information, insight, analytics and data-enabled solutions, today sent a letter to CoStar Group (NYSE: CSGP) in response to its revised acquisition proposal dated March 1, 2021.
The text of the letter follows:
March 4, 2021
Andrew C. Florance
CEO & President
CoStar Group, Inc.
1331 L Street, NW
Washington, DC 20005
Dear Mr. Florance:
The Board of Directors of CoreLogic, Inc. (“CoreLogic” or the “Company”) has carefully reviewed the updated terms of your March 1, 2021 proposal, including the submitted merger agreement (collectively, your "Updated Proposal") and has not concluded that your Updated Proposal is a Superior Proposal as defined in our merger agreement with affiliates of Stone Point Capital and Insight Partners (the "Pending Transaction"). The CoreLogic Board unanimously believes your Updated Proposal requires further improvement with respect to the following key areas: (i) value, (ii) certainty of value, and (iii) certainty of closing in a timely manner.
We continue to believe that there is strategic potential in the combination of our two businesses and we request that you reconsider your positions on these important terms.
Value and Value Certainty: We appreciate your inclusion of cash consideration that, as we expressed in our prior letter and had discussed with you previously, helps to provide greater certainty of value. However, $6 per share in cash does not meaningfully reduce CoreLogic shareholders' exposure to the concerning volatility of your stock. Since your February 16, 2021 proposal, CSGP shares have continued to decline – approximately 19%, or $177 per share (including a 12% decline since CoStar’s fourth quarter earnings release). As a result, your Updated Proposal represents a significantly lower implied total per share value than your prior proposal on February 16, 2021. The volatility and trajectory of CoStar’s share price have driven increased concerns with respect to the certainty of value associated with CoStar’s stock, particularly in light of your proposed terms that contemplate an antitrust process of up to 15 months.
We would also note that our Pending Transaction has continued to progress toward closing, which is expected to occur during the second quarter of 2021. Given that your Updated Proposal includes a Termination Date that could be extended unilaterally by you to potentially a year beyond the expected closing date of the Pending Transaction, we observe that the time value of money at any reasonable cost of capital and assumed period of incremental time to transaction close impacts the present value of your Updated Proposal.
For these reasons, we invite you to reconsider your position. Any new proposal should deliver increased, more certain value and as much cash consideration as possible. 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.
Certainty of Timing: You have been clear throughout, as you stated in your February 16, 2021 letter, that CoStar firmly believes "the deal has a very high degree of certainty of closing in a rapid time frame" and "there are simply no meaningful antitrust concerns." You reinforced this view in your Updated Proposal letter in which you wrote: "We continue to believe that the proposed combination is pro-competitive, and as such, does not present any meaningful antitrust concerns." Your Updated Proposal, however, would enable you to unilaterally extend the Termination Date in order to obtain antitrust approval to up to 15 months from signing, which you have said you may need in order to engage in prolonged negotiations or to litigate with the government. The terms of your Updated Proposal and your rationale for the extended Termination Date are inconsistent with your public statements that there is no meaningful antitrust risk. A 15-month outside date exposes CoreLogic shareholders to unnecessary delay and risk, as well as exposure to CoStar stock price volatility.
Merger Agreement: We will separately send you and your legal advisors a revised merger agreement reflecting important, limited clarifications to the agreement included with your Updated Proposal.
We continue to appreciate your interest in acquiring CoreLogic and we remain committed to protecting and maximizing value for our shareholders. Our feedback above is aligned with that objective, and our Board stands at the ready to reconvene should you determine to revise your proposal to address these matters.
Sincerely,
Frank Martell
On February 4, CoreLogic’s Board of Directors unanimously approved a definitive merger agreement under which funds managed by Stone Point Capital and Insight Partners agreed to acquire all outstanding shares of CoreLogic for $80 per share in cash. The merger agreement remains in full force and effect, and the Board of Directors of CoreLogic has not withdrawn or modified its recommendation that the stockholders of CoreLogic vote in favor of the approval of the merger, the merger agreement and the transactions contemplated thereby.
Evercore is serving as financial advisor to CoreLogic and Skadden, Arps, Slate, Meagher & Flom LLP is serving as the Company’s legal advisor.
CLGX-F
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