Costar Group (CSGP) Submits Revised Proposal to Acquire CoreLogic (CLGX) for Cash and Stock Valued at $90/sh
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Today, CoStar Group, Inc. (NASDAQ: CSGP) delivered a letter to the Board of Directors of CoreLogic (NYSE: CLGX) setting forth the terms of a revised proposal by CoStar Group to acquire 100% of the equity interests of CoreLogic. Under the terms of the new proposal, CoreLogic shareholders would receive $6.00 per share in cash and 0.1019 shares of CoStar Group common stock in exchange for each share of CoreLogic common stock, representing a value of approximately $90 per share based on CoStar Group’s closing share price on February 26, 2021 and approximately $97 per share based on the latest 30-day volume-weighted average CoStar share price. The new offer represents a $17 per share improvement over the Stone Point and Insight offer, which is equivalent to over $1.25 billion more in aggregate value. The Stone Point and Insight offer now represents a 6% discount to CoreLogic’s latest closing price of $84.66, while the CoStar Group offer represents a 15% premium and implies pro forma diluted ownership of approximately 16.2% in the combined entity and $450 million in cash for current CoreLogic stockholders.
The following is a copy of the letter that CoStar Group delivered to the Board of Directors of CoreLogic on March 1, 2021:
Dear CoreLogic Board Members:
We write to provide you with updated terms of a negotiated transaction, which we are confident constitute a “Superior Proposal” under your existing agreement with Stone Point Capital and Insight Partners (the “SPC Agreement”). Since your announcement of the SPC Agreement and our previous letter to you on February 16, 2021, your stock price has remained well above the SPC Agreement’s $80 per share price. Clearly, your stockholders are holding firm to their support for a transaction between our two companies over the SPC Agreement.
CoStar Group is committed to moving forward with such a transaction. Set forth below are our revised key terms since our February 16th letter, addressing all of your issues. We will separately send you and your legal advisors a version of the merger agreement memorializing the terms below. We are prepared to sign that version immediately.
We expect the CoreLogic Board to deem this proposal to be a “Superior Proposal” within 48 hours.
Consideration: We propose a merger transaction whereby CoStar would acquire 100% of the equity interests of CoreLogic in a stock and cash transaction. CoreLogic shareholders will receive 0.1019 shares of newly issued CoStar common stock and $6.00 in cash for each share of CoreLogic’s issued and outstanding common stock. This implies a headline value of $90 per share based on CoStar’s latest closing share price and $97 per share based on the latest 30-day volume-weighted average CoStar share price. Further, this offer represents over $1.25 billion more in aggregate value or a $17 per share improvement over the SPC Agreement. The SPC Agreement now represents a 6% discount to CoreLogic’s latest closing price of $84.66, while our offer represents a 15% premium (and a 21% premium to the SPC offer of $80/share) and implies pro forma diluted ownership of approximately 16.2% in the combined entity and $450 million in cash for current CoreLogic stockholders.
Antitrust Covenant and Timing: We continue to believe that the proposed combination is pro-competitive, and as such, does not present any meaningful antitrust concerns. Accordingly, we will agree to an antitrust covenant that we will take all actions to obtain the required antitrust approvals up to a material adverse effect on the combined company.
We understand that certainty of closing is a key concern for the CoreLogic Board. Additional time and flexibility to extend the Termination Date are therefore crucial to reducing risk that the deal does not close as a result of failure to obtain antitrust clearance. In a deal such as this one with no horizontal competition concerns, the single most important contractual provision for ensuring certainty of close is ample time to seek regulatory clearance, including time to negotiate with and/or litigate against regulatory authorities.
We now propose to set the initial Termination Date at six months – the same as in the SPC Agreement. To ensure a successful close, we need the ability to extend the Termination Date for an additional 6-month and 3-month period, if required, to resolve any remaining hurdles to antitrust clearance.
Payment of Pending Termination Fee: We will agree to advance payment of the $165 million termination fee payable under the SPC Agreement.
Diligence Cooperation Efforts: We will agree to not sell assets or “shop” parts of the business prior to the closing and will limit such covenant to be only applicable in furtherance of the required antitrust obligations. To be clear, CoStar would only have the ability to have such discussions in order to satisfy the higher antitrust covenant that we are now accepting.
Intervening Event at CoStar: We will agree to a formulation that allows the CoreLogic Board to consider all criteria that the law requires it to consider. This, combined with the “Material Adverse Event” closing condition already in our proposal and your stockholder vote, is more than sufficient to provide necessary comfort for the exercise of any fiduciary duties.
Our response conclusively constitutes a “Superior Proposal” under the terms of the SPC Agreement. We are confident that after consultation with your outside legal counsel and financial advisors and considering all legal, regulatory and financing aspects that you deem appropriate, that our revised proposal described herein is more favorable, from a financial point of view, to CoreLogic’s stockholders than the transactions contemplated by the SPC Agreement.
We look forward to your response.
Andrew C. Florance
Chief Executive Officer
CoStar Group, Inc.
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