Stockholders of embattled online direct marketer LifeMinders
voted Wednesday to sell their shares to Cross Media Marketing,
giving the green light to a merger that will become effective at the close of business.
In July, New York-based Cross Media, an online and offline direct marketing player, offered $68.1 million in either cash or a mixture of cash and stock — either $2.56 in cash, or $0.84 in cash and $1.72 in stock of the merged corporation. (The payout represented a 33 percent premium over Herndon, Va.-based LifeMinders’ closing price on Tuesday.)
However, Cross Media said that it would pay a maximum of $24 million in cash to shareholders — meaning that if too many LifeMinders’ shareholders requested the all-cash deal, they would receive the cash and stock mix instead.
That fact became the point of contention that a rival bidder — affiliate marketer Encore Marketing International — hoped to parlay into a successful counteroffer for LifeMinders. Encore offered only one payment option: $1.262 in cash and $1.049 worth of stock in the merged corporation, for each share of LifeMinders’ common stock.
Ultimately, however, Encore’s unsolicited offer failed to win shareholder support, although it would have put more cash into the hands of shareholders than would Cross Media’s cash and stock payout.
Spokespeople for Cross Media said the merger, which becomes effective at the close of business on Wednesday, would boost its e-mail practice by adding LifeMinders’ delivery technology. Additionally, Cross Media gains LifeMinders’ 20 million opted-in members, and about $20 million in cash that remains in the smaller firm’s coffers after merger costs.
“This event represents the beginning of a major new chapter for Cross Media in what has already been a remarkable history,” said Cross Media chairman and chief executive Ronald Altbach. “We are excited about the combined companies’ prospects and opportunities in our quest to build a highly powerful, efficient and responsible sales engine … We continue to be committed to the creation of shareholder value and are highly enthused about the addition of the LifeMinders’ stockholders to the world of Cross Media.”
LifeMinders likely will continue operating in Herndon, with two seats on Cross Media’s board of directors.
Cross Media also took the opportunity to announce that its stockholders had approved a 1 for 5 reverse split of Cross Media Marketing Corporation’s common stock, effective at the close of business Wednesday.
The news concludes months of difficulty for LifeMinders, which has tried to make its personalized e-mail marketing business pay off. In January, the company announced sizable restructuring, client contract renegotiation and the abandonment of its wireless service — which it had launched through the purchase of New York-based smartRay in 2000, for $32.5 million in cash and stock. Four months later, executives revealed that the company was searching for a buyer, as it reported a 52 percent drop in quarterly revenues.
On the other hand, the merger comes as the latest effort by Cross Media to beef up its online and database marketing capabilities. On Tuesday, the firm launched Premia, an online affiliate marketing program. The service offers discounts and special offers — such as reduced-price movie tickets and gasoline — to subscribers.
Altbach said membership fees could run from $40 to $200 annually for access to the service, which he described as advancing “the Cross Media vision calling for the creation of life-long relationships with customers by delivering the right products and services to the right audience at the right time through the technology channels that best fit their changing lifestyles.”