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Friday, Dec 8, 2023

Frank Martell Gets His Price on CoreLogic

Frank Martell spent three years telling Wall Street that his CoreLogic Inc. was undervalued when its stock hovered around $40 a share.
The chief executive even argued that a $65 hostile bid made last June was too low for the Irvine-based provider of real estate and insurance data (NYSE: CLGX).
On Feb. 4, he finally got the price he wanted—$80 a share, or about $6 billion.
CoreLogic’s board of directors unanimously approved an agreement under which funds managed by a pair of private equity firms, Stone Point Capital and Insight Partners, will acquire all outstanding shares of CoreLogic.
It’s a 51% premium to CoreLogic’s share price on June 25, before the hostile bid that set in motion the sale of the company, which last week stood as Orange County’s seventh most valuable public company.
“Stone Point and Insight Partners are highly respected investors who recognize the value and potential of CoreLogic’s digital content, solutions and market-leading platforms that power the housing economy,” Martell said in a statement announcing the deal.
Martell implied that the current management intends to stay at CoreLogic, which employs about 400 people in Orange County.
“We look forward to working closely with Stone Point and Insight to build on our record financial and operating performance and accelerate our digital transformation and growth,” he said in announcing the sale.

Higher Offer?
Some investors believe the company might be worth even more, as CoreLogic’s shares hovered around $82 at press time. Prior to the announced price, Bloomberg News, citing unidentified people familiar with the matter, said CoStar Group Inc. (Nasdaq: CSGP) submitted an all-stock offer at $86 a share, valuing CoreLogic at $6.7 billion. Warburg Pincus reportedly made a lower cash offer.
Exactly why CoreLogic chose the Stone Point-Insight Partners bid wasn’t revealed as executives involved in the deal declined to speak with the Business Journal.
“Our guess is that CLGX preferred a cash offer and that Stone Point/Insight offer was higher than Warburg Pincus,” Baird Equity Research analyst Jeffrey Meuler wrote in a note to investors. “We heard mixed reactions from CSGP’s investor base regarding a potential acquisition of CLGX.”
CoreLogic’s officials cited a “high degree of regulatory certainty” with the Stone Point/Insight bid, the analyst noted.
CoreLogic has agreed to “immediately cease” any discussions with third parties for a competing offer, according to a filing with the Securities and Exchange Commission.

The Hostile Bid
CoreLogic has come to dominate certain parts of the real estate data and analytics industry. It has the leading market share of real estate listing software systems, serving more than 50% of all U.S. and Canadian real estate agents. About 7 out of every 10 mortgages use one or more of its data sets, Martell told the Business Journal in a June interview, just before a hostile bid was made public.
“We’ve spent many years reshaping the company’s revenue streams,” Martell told the Business Journal at the time. “We’re choosy on where we want to grow.”
A day after that interview, the company executives were stunned when Cannae Holdings Inc. and Senator Investment Group LP made their unsolicited bid of $65, causing CoreLogic shares that day to leap 28% to $67.33.
The offer was led by Bill Foley, who was well known in Orange County circles in the 1990s as the chief executive of Fidelity National Financial Inc. (NYSE: FNF), a title insurer rival to Santa Ana’s First American Financial Corp. (NYSE: FAF), which spun off CoreLogic in 2010. Fidelity was once based in Irvine and has since relocated to Florida.
Foley is also known in the 1990s for rescuing then Anaheim-based fast-food franchise Carl’s Jr., which was founded by legendary entrepreneur Carl Karcher.
CoreLogic fought off the hostile bid, which ended in November when shareholders elected only three of Foley’s nominees to the 12-member board.
Once other investors indicated they might offer $80 or more, Foley’s activists withdrew their offer.
Foley’s funds, by back of the envelope calculations, enjoyed a $200 million gain for their fight.

Local Ties
The winning buyers aren’t new to Orange County.
N.Y.-based Insight was a 2014 investor in Alteryx Inc. (NYSE: AYX).
Greenwich, Conn.-based Stone Point has invested in OC’s Alliant Insurance Services, employment screener HireRight, lender Sabal Capital Partners and corporate restructuring service provider Stretto. Stone Point has relationships with multiple insurance companies and outsourced mortgage providers.
“CoreLogic is a mission critical vendor and data provider across industry sectors in which Stone Point has specialized over the past 20 years, including mortgage, residential real estate and P&C insurance,” Chuck Davis, CEO of Stone Point Capital, said in a statement.
“CoreLogic’s proprietary data assets are increasingly important to its customers, and we look forward to leveraging our network within the broader financial services industry to support the company’s next phase of growth.”

Attractive Outcome

The transaction will be financed through a combination of $2.5 billion in equity financing provided by funds managed by Stone Point Capital and Insight Partners, as well as $5.5 billion in debt financing from J.P. Morgan Securities. The transaction is expected to close in the second quarter subject to shareholder approval, regulatory approvals and other customary closing conditions.
The $80 price represents a multiple of about 18 times 2021 adjusted profit earnings, William Blair analyst Stephen Sheldon wrote in a note to investors.
“Overall, this seems like a very attractive outcome for CoreLogic shareholders,” Sheldon said.
Frank Martell was right after all. 

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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