CoreLogic’s Board Says Revised CoStar Proposal Not Superior

CoreLogic Inc.’s board of directors deemed CoStar Group Inc.’s revised bid to not be superior to the deal it has already agreed to with another pair of suitors.

Even with the addition of a $6 per share cash component to CoStar’s previous all-stock offer, the board unanimously agreed that the proposal needed further improvement, CoreLogic Chief Executive Officer Frank Martell said in a letter seen by Bloomberg News.

The response to CoStar’s revised offer leaves CoreLogic’s earlier agreement with Stone Point Capital and Insight Partners in place, trumping CoStar CEO Andrew Florance’s assertion in his March 1 letter that within 48 hours, CoreLogic’s board would deem the updated proposal better than its existing deal.

CoreLogic shareholders would receive $6 a share in cash and 0.1019 shares in CoStar stock, according to the updated offer. CoStar CEO Florance said in the March 1 letter that the latest proposal represented a $1.25 billion improvement to Stone Point Capital and Insight Partners’ offer.

CoreLogic shares were up 0.5% at $83.31 at 10:53 a.m. in New York, above the private equity group’s $80 offer. CoStar shares were up 1.1% at $771.40.

At CoStar’s stock price Thursday, its bid for CoreLogic was worth roughly $84.60.

A CoStar representative didn’t immediately respond to a request for comment.

A material increase in the cash portion of the bid would improve the strength of the proposal, Martell wrote.

“$6 per share in cash does not meaningfully reduce CoreLogic shareholders’ exposure to the concerning volatility of your stock,” Martell said.

Due to a decline in CoStar’s shares since first disclosing its offer to shareholders on Feb. 16, CoStar’s cash-and-stock proposal now represents a significantly lower implied value, Martell said. CoStar’s shares have fallen about 19% since Feb. 16.

Martell also expressed concern that the terms of the deal allow CoStar to extend the transaction’s termination date for more than a year, Martell said, which could also potentially impact the value of the updated proposal.

“Any new proposal should deliver increased, more certain value and as much cash consideration as possible,” he said.

CoreLogic’s board continues to believe there is strategic potential in a combination of the two businesses, and it stands ready to reconvene if CoStar revises its proposal, Martell said in the letter.

The U.S. housing boom, fueled by historically low mortgage rates and the pandemic-era grab for extra space, has ignited interest in property technology. That’s made CoreLogic, known in the real estate world for its home-price indexes, an appealing takeover target.

The Irvine, California-based company had launched a strategic review in November amid a boardroom battle with investors Cannae Holdings Inc. and Senator Investment Group. The pair subsequently won three seats on CoreLogic’s board.

One of CoreLogic’s shareholders, Pentwater Capital Management, has nominated its CEO Matthew Halbower to the board and said it may seek support from fellow shareholders to remove members of the board if it chooses to proceed with an inferior transaction. A representative for Pentwater wasn’t immediately available for comment Thursday.

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