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D&B Says it Won't Boost Hoover's Bid

Corporate data provider D&B said it would not improve its existing $7 per-share offer to acquire fellow business database company Hoover's , leaving open the possibility that a rival investor group's $8 bid could prevail.

A rival investment group, including a dissident shareholder, had argued that Hoover's online database business lines were growing rapidly and deserved a higher offer. But the Short Hills, N.J.-based D&B said it would try to complete the transaction at the lower price.

"We made a commitment to our shareholders to create value during our transformation into a growth company with an important presence on the Web," said Allan Z. Loren, chairman and chief executive officer of D&B, in a statement.

Although Hoover's is a "natural fit for D&B," Loren said after extensive reviews of the transaction, the company felt that paying more was not in the best interests of its shareholders.

D&B, formerly Dun & Bradstreet, had made an offer to purchase the Austin, Texas-based Hoover's for an all-cash $7 per-share offer, a deal valued at about $117 million.

But a dissident shareholder, Mario Cibelli, said felt the offer was too low, given the fast growth in Hoover's online subscriptions for business data about other companies.

In a January research report, Steven Gear of Wunderlich Research Partners, a division of Wunderlich Securities, noted that Hoover's core subscription revenue in its fiscal third quarter had jumped by 31 percent from the same, year-ago time.

In addition, Gear noted that Hoover's subscription revenues now represent over 80 percent of the company's total revenue, compared to subscription revenue that represented 67 percent of its total revenue during the year-ago quarter.

Last week, two private investment firms, Austin Ventures and Cibelli's Marathon Partners, which holds about a 9 percent stake in Hoover's, topped the D&B offer for Hoover's with an $8.00 per-share cash tender offer, valuing the deal at about $130.4 million.

In announcing it would not improve on its standing $7 per share bid, D&B said it would try to complete the transaction under the terms of the merger agreement. Hoover's shareholders were scheduled to vote on the D&B offer this week.

If the transaction is not completed, D&B said it would make a further announcement concerning its 2003 guidance.

Neither spokespeople for the investor group, nor for D&B, immediately returned phone calls.

For the fourth quarter of 2002, Hoover's said its net revenues increased 9 percent to $8.6 million. Its net income for the quarter was about $318,000. It also listed about $22 million in cash and cash equivalents on its balance sheet as of the end of the year.

In its fourth quarter report, Hoover's said if the deal with D&B does not happen, the company may have to pay a break-up fee of $5.7 million to D&B.