The future of real estate data giant CoreLogic Inc.’s management and board of directors—including prominent local executive Paul Folino—may well be decided in a meeting on Nov. 17.
The shareholder meeting for the Irvine-based company (NYSE: CLGX) could also set into motion a quick sale of the provider of real estate and mortgage data, which counts a market value near $6 billion and is Orange County’s 6th-largest public company by valuation.
A proxy battle that’s been months in the making this week is expected to bring up the issue on whether to replace nine of CoreLogic’s 12-member board of directors, including Chairman Folino, who is best known locally for having guided networking manufacturer Emulex Corp. and is now a prominent philanthropist in the area.
Plenty’s changed since activist investors Cannae Holdings Inc. and Senator Investment Group LP first proposed buying the company for $7 billion in June, factoring in debt of around $1.8 billion.
In September, they offered a revised $66 a share for the company, up from an initial offer of $65. However, other investment groups have offered $80 or more, according to CoreLogic, which did not specify who the other bidders were.
CoStar Group Inc., Advent International Corp., Thoma Bravo LP and a private equity group backed by Warburg Pincus are reported to be among the interested parties.
Shares of CoreLogic were trading around $77 as of late last week.
Change of Plans?
The new bids resulted in at least one large investor asking why the company was continuing to hold a proxy vote instead of transitioning to an auction process.
“CoreLogic’s hesitation to immediately capitalize on this opportunity is puzzling,” said a statement from TIG Advisors LLC, which said it owns 2.4 million shares of CoreLogic, currently worth about $185 million.
TIG said it worried that the current board could control strategic direction until its annual meeting next April, an event that “can be easily delayed.”
“We feel there is a clear mandate for shareholders to implement new board members at the upcoming Special Meeting,” it said, saying CoreLogic’s three longest serving directors should be voted out.
Earlier this month, CoreLogic said it intends to hold its proxy vote meeting as scheduled, albeit virtually due to the coronavirus.
As of press time, the proxy vote was still scheduled.
Homecoming
CoreLogic in 2010 was spun out of Santa Ana-based First American Financial Corp. (NYSE: FAF).
Since Frank Martell became chief executive in 2017, he’s been shedding lower margin businesses that have also caused revenue to fall.
Even though Martell’s been trying to convince investors that revenue was ready to accelerate, CoreLogic’s share price was flat around $35 in the three years prior to the most recent bid.
If the activist vote is successful, it will be a homecoming of sorts for 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 once based in Irvine and which has since relocated to Florida. Fidelity is First American’s main competitor.
Foley is also known in the 1990s for helping save the Carl’s Jr. fast food restaurant chain, which was founded by legendary entrepreneur Carl Karcher and then based in Anaheim.
Foley is leading Senator Investment Group and Cannae Holdings, which own about 10% of CoreLogic’s shares.
The two sides in recent months have sent letters to shareholders arguing their case and pointing out the weaknesses of their opponents.
“Most recently, CoreLogic has learned that Senator/Cannae are suggesting to market participants that our strategic review process is somehow not real—yet another false assertion,” the company said in a Nov. 9 statement.
“The Board correctly rejected an opportunistic lowball bid by Senator/Cannae despite an aggressive stream of hostile pressure tactics,” it said.
CoreLogic in recent months has boosted its revenue and profit forecasts and increased its dividend and share buyback programs.
Senator’s proposed slate of nine directors issued their own letter, saying the proxy vote is not about giving control of CoreLogic to Foley’s activist investors.
“We are completely independent of Senator and Cannae and have no allegiance to them,” the letter said. “If elected, each of us believe we would have a mandate from shareholders to conduct a thorough sales process designed to elicit the highest bid for the company, and to compare that bid against the company’s standalone plan.
ISS Note
Institutional Shareholder Services (ISS), which analyzes proxy votes for institutional investors, suggested replacing only the three longest tenured directors, J. David Chatham, Thomas C. O’Brien, and David F. Walker.
“Our analysis of the dissident campaign—in conjunction with the mounting evidence that there is robust interest in acquiring the company—suggests that shareholders would benefit from the presence of new directors to ensure that the engagement with potential acquirers is managed to maximize value,” ISS said in its statement.
“In recognition of the gap between the proposed acquisition price of $66 and what appears to be full and fair value, however, support is only warranted for replacing a minority of the board.”
Foley’s Windfall
On June 26, the day the activists first announced their intentions, CoreLogic’s shares soared 28% to $67.61.
In October, CoreLogic disclosed it’s been talking with two other groups that might buy the company at $80 or more a share.
The Foley-led dissident activists said they “are not a bidder” in the $80s, but said that such a deal would be a “great outcome” for shareholders.”
Either win or lose, Foley’s activists look to come out ahead. The value of their 10% stake is now worth about $600 million, or $200 million more than the day they started the activist battle.
