Two firms are making a play for the assets of struggling online direct marketer LifeMinders,
following a $64 million rival bid issued by privately-held Encore Marketing International late last month.
Now, LifeMinders, its board of directors and its shareholders must decide whether to accept the original bid from Cross Media Marketing
— already approved by the companies’ boards — or the unsolicited counteroffer from Encore, a Lanham, Md.-based affinity marketer, which made its bid public on Monday.
LifeMinders spokespeople declined to comment beyond saying that its board of directors had initially rejected Encore’s offer, but now would revisit Encore’s proposal “in light of current market conditions” — referring to the market’s greater uncertainty following the Sept. 11 attacks and the possibility of U.S. military action.
LifeMinders’ spokespeople said the firm would likely respond to the Encore bid within a week, and acknowledged the possibility of a hostile takeover attempt.
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.
But Cross Media’s offer entailed some complicated conditions: under some recent revisions to the deal, the total cash paid to LifeMinders’ shareholders cannot exceed roughly $24 million, or else shareholders would receive a mix of cash and stock. Also, the offer is subject to a reduction in payout of $1.75 million, should LifeMinders dip into its cash and marketable securities stash, valued at around $49.0 million.
Encore, on the other hand, is offering only a cash-and-stock deal: $1.086 in cash and $1.225 worth of stock in the merged corporation — to be called LifeMinders — for each share of LifeMinders’ common stock.
All told, that means that Encore is making $30 million in cash available to LifeMinders’ stockholders — $6 million more than Cross Media offered. Additionally, if Cross Media opts to make its payout in a combination of cash and stock, Encore’s offering would give LifeMinders’ shareholders about $0.25 more cash per share.
But wait, there’s more: Encore offered to increase the cash amount LifeMinders stockholders would receive if certain, unspecified conditions were met. In such an event, LifeMinders stockholders would receive $1.155 in cash and $1.155 worth of common stock in the merged corporation, for each share of LifeMinders common stock — $32 million total.
At any rate, if it’s successful in its bid, Encore, which to date has focused primarily on offline affinity marketing, said that it plans to use LifeMinders’ e-mail marketing technology as a regular part of its services, which so far rely heavily on telephone, direct mail and direct response television spots. Additionally, Encore said it would promote its affinity clubs to LifeMinders’ membership, and try to encourage opted-out members to opt back in to LifeMinders e-mails.
“We believe that our proposal to LifeMinders is a superior offer to any the company has on the table, including Cross Media,” said Encore chief executive Steve Klein in a statement. “Encore is a solid, profitable company that creates a unique cross-selling opportunity for both companies, leveraging our respective client bases.”
“We are fully confident that the stockholders of LifeMinders would want our proposal considered,” he added. “Encore provides a unique value proposition to LifeMinders, and an opportunity for greater return to stockholders.”
Neither Cross Media nor Encore returned requests for comment by press time.