Troubled Web direct marketer Lifeminders, Inc. has rejected a rival offer from Lanham, Md.-based affinity group marketer Encore Marketing and reiterated its support for an earlier merger deal with Cross Media Marketing Corp.
LifeMinders and Cross Media plan to hold their special stockholder meetings to vote on the merger on Oct. 24.
By early Wednesday morning, Encore officials had not indicated if they intended to proceed with a hostile takeover bid.
Last month, Encore went public with its unsolicited counter offer for Lifeminders’ assets, which represented a major challenge to Cross Media Marketing’s earlier bid.
In July, New York-based Cross Media offered $68.1 million in cash, or both cash and stock, for LifeMinders’ outstanding shares — either $2.56 in cash, or $0.84 in cash and $1.72 in stock of the merged corporation. However, Cross Media said that it would pay a maximum of $24 million in cash to shareholders — meaning that it wouldn’t honor any requests for cash beyond that, and would issue stock instead.
Encore originally offered $1.086 in cash and $1.225 worth of stock in the merged corporation for each share of LifeMinders’ common stock. Altogether, Encore would be doling out $30 million in cash to shareholders, at a higher per-share premium than Cross Media’s offer would. In September, Encore raised the stakes even higher: $1.262 per share in cash and $1.049 in stock — a payout of approximately $64 million, $34.9 million of which is in cash.
But in an announcement late Tuesday, the Lifeminders’ board determined that the most “recent offer from Encore Marketing International is not a superior offer under the terms of the LifeMinders’ merger agreement with Cross Media.”
Jonathan Bulkeley, chairman and chief executive officer of the Herndon, Va.-based LifeMinders, said, “Several months ago when we began the process of reviewing strategic alternatives for the company, we established internal guidelines for analyzing proposed transactions in which LifeMinders stockholders would receive equity. These guidelines stipulated that the acquiring company should have positive earnings before interest, taxes, depreciation and amortization (EBITDA), have demonstrated strong year-over-year revenue growth and that the combined business would be attractive to our stockholders as a public company. After carefully reviewing many proposed transactions, our Board concluded that a merger of LifeMinders with Cross Media Marketing met the Board’s previously established guidelines and is in the best interests of LifeMinders stockholders.”
Bulkeley added, “With regard to the proposals from Encore, our Board, with the advice of our financial advisor Legg Mason Wood Walker Inc., has carefully analyzed all relevant factors including Encore’s detailed financial statements, multi-year projections and the current capital structure. Our Board concluded that the Encore proposal is not superior to the Cross Media transaction.”
Lifeminders Rejects Encore Offer
