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Public Cobalt Group Goes Private

Investment firm Warburg Pincus Monday took the Cobalt Group Inc., an e-business products provider that specializes in helping automotive dealers manage their practices online, private.

Already Cobalt's largest shareholder with a 46 percent stake, Warburg Pincus will tuck Seattle-based Cobalt in for a price of $3.50 per share. The purchase price represents approximately a 79 percent premium to the $1.95 closing share price on June 1.

Shares held by Warburg Pincus will not be converted in the merger, and certain other shareholders, including directors and senior management of Cobalt, also may retain an equity interest in Cobalt after completion of the merger.

Cobalt recently entered into the merger agreement after receiving the unanimous recommendation of a special committee of independent directors that had been established to evaluate and negotiate the transaction on behalf of Cobalt's board of directors. SG Cowen Securities Corp. advised the committee.

Warburg Pincus and John W.P. Holt, Cobalt's president and chief executive officer, who collectively own 49 percent of Cobalt's outstanding common stock, have entered into a voting agreement pursuant to which they have agreed to vote to approve the proposed merger at a future scheduled shareholders' meeting. Shareholder approval will be solicited by means of a proxy statement, which will be mailed to shareholders after it is reviewed by the Securities and Exchange Commission.

Cobalt expects to hold the shareholders meeting to vote on the proposed merger in September 2001 and to complete the transaction shortly after that meeting.

Cobalt, whose offerings include Web site hosting, e-commerce applications and customer relationship management (CRM) applications among other things, made headlines last week when it announced a new CRM product for the automotive industry.

Created in conjunction with software firm Acxiom Corp. and auto industry consumer analysis provider LogicLinc, AutoMarket In.Sight is a suite of software and services designed to help auto dealers and manufacturers improve customer retention and increase sales and service. Claiming the release would push the envelope in CRM, the Cobalt Group said it will develop the application interface and maintain the dealer applications through its MotorPlace.com portal.

Cobalt Group has some clout in the automotive industry, too. In January, the Cobalt Group became the first e-business provider endorsed by the National Automobile Dealers Association (NADA) when it agreed to offer its products to auto dealers across the United States. NADA represents more than 40,000 auto franchises in the U.S. alone.