Inside CoreLogic's dramatic fight against a hostile takeover

December 25, 2020 1:08 PM

While 2020 presented huge challenges for the mortgage and real estate sectors, CoreLogic had an especially dramatic year. The data and analytics company vigorously fought off a hostile takeover effort from stakeholders Senator Investments and Cannae Holdings, although the pair did not exit the scene after their bid ended. Given that Cannae Chair Bill Foley is also chair to CoreLogic competitor Black Knight, the battle has been especially contentious. Below, we review key moments in the corporate tussle.

Feb. 27: CoreLogic posts 4Q 2019 earnings growth

The company logged 6% revenue growth year-over-year, which would have been 12% growth if not for an exit from noncore mortgage and default technology units. President and CEO Frank Martell credited the firm’s boosted earnings to its pivot to an appraisal management company business model.

"Our new service model has attracted significant market interest and we've recently secured major new contracts with two of the top 10 U.S. mortgage originators," he said. "These wins together with a host of other new contracts for our reimagined service model are expected to generate strong double-digit underlying AMC revenue growth with higher margins in 2020."

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May 1: CoreLogic posts best 1Q earnings ever

The company further touted its successful pivot to the appraisal management model at the start of May, when Martell announced that the company had a net income of $33.8 million in the first quarter, up from $30.1 million in 4Q 2019.

Martell expected that second quarter earnings would take a $15 million to $20 million hit because of the coronavirus, with revenue ranging from $420 million to $445 million.

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June 26: Senator and Cannae launch takeover effort

The two entities, which combined hold a 15% stake in CoreLogic, made their play in the spring by offering to pay $65 per share in cash for a total estimated enterprise value of $7 billion. Cannae Holdings Chairman Bill Foley, who is also executive chairman of CoreLogic competitor Black Knight, chairman of the No. 1 title underwriter Fidelity National Financial, and vice chairman of fintech Fidelity National Information Services, appeared to be actively raising capital in preparation for a deal.

In response, the company advised its stakeholders not to take action.

"CoreLogic's board of directors, consistent with its fiduciary responsibilities, will carefully review the proposal with the assistance of financial and legal advisors to determine the course of action it believes is in the best interests of the company and its shareholders," the company said in a press release.

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July 7: CoreLogic rejects takeover bid

CoreLogic turned down the bid, citing Cannae chair Foley's ties to other companies within the sector.

"We are unanimous in our belief that CoreLogic will be able to deliver significantly more value to shareholders than this opportunistic proposal," Chairman Paul Folino said in a press release.

Senator and Cannae shot back, accusing the company of lying about its knowledge of the takeover effort while at the same time, hiring an attorney to defend against it.

They also claimed CoreLogic adopted "a poison pill while summarily rejecting our proposal with the typical smokescreen of regulatory concerns and overly optimistic multi-year projections. Notably this is the same company that for 10 years enjoyed ironclad protection from acquisition offers due to a purchase right that only expired June 1."

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July 20: CoreLogic denies due diligence request from bidders

CoreLogic rejected a due diligence request from Senator and Cannae, after the companies refused to raise their price from $65 per share.

"The CoreLogic board will not provide nonpublic information to Senator and Cannae unless they first raise their offer to a level that provides appropriate value to our shareholders," CoreLogic representatives stated in a press release.

Between the date when the takeover bid became public, on June 26, and July 20, the company's stock had traded around the price offered by Senator and Cannae.

"We are open to continuing our dialogue, but we are focused on delivering superior shareholder value by executing on our plan," the CoreLogic press release added.

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July 23: CoreLogic logs higher than expected 2Q earnings

While boasting a net income of $56 million in the second quarter, CoreLogic underscored its value to shareholders, defending its value in the face of the takeover effort.

"We believe that our publicly announced 2020, 2021 and 2022 financial forecasts and operational plans are very achievable and are supported by demonstrable facts and visible trends. We plan to continue to provide significant transparency into our business so that all shareholders can fully appreciate CoreLogic's substantial current and potential value creation," Martell stated.

The company committed to the previously announced $1 billion share repurchase authorization, expecting to repurchase at least $500 million this year, $300 million in 2021 and the remainder in 2022. It added the share repurchase program is expected to be more than 10% accretive to next year's earnings per share; when the program ends, it should reduce outstanding shares by more than 15%.

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July 27: Senator and Cannae attempt replacing 9 CoreLogic directors

Senator and Cannae threatened to replace the board of the company if CoreLogic continued to refuse to have discussions about the takeover.

"If these are not just delay tactics, the company has the opportunity now to promptly call a special meeting in early October — the date shareholders could have reasonably expected a meeting before the company began all of this gamesmanship," Senator partner Quentin Koffey and Cannae Chief Executive Officer Richard Massey said a letter to CoreLogic, according to Bloomberg.

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Aug. 31: Bidders accuse CoreLogic of 'muddying the process'

CoreLogic announced a Nov. 17 special meeting to vote on Cannae Holdings and Senator Investment Group's slate of nine people whom they would like to install on the company's board.

But in a statement, Cannae and Senator said CoreLogic told them it could unilaterally cancel that meeting at any time unless they went through the "cumbersome" solicitation process.

"Games such as these — publicly announcing a meeting, while privately stating the company can cancel it and not allow shareholders to replace directors — are clear signs of CoreLogic's focus on entrenchment rather than shareholder value," a statement from the bidders said.

CoreLogic shot back that the bidders were creating confusion.

"CoreLogic has publicly committed to holding the special meeting on Nov. 17," a statement from a company spokesperson said. "Senator and Cannae are persisting in running an unnecessary consent solicitation to call a special meeting that has already been called to address the business they propose. We believe this tactic is designed to confuse shareholders and distract them from the fact that the Senator/Cannae proposal significantly undervalues CoreLogic."

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Sept. 15: CoreLogic rejects higher bid from Senator and Cannae

After Cannae and Senator upped their bid by just a dollar per share, CoreLogic rejected it.

"We remain open to all paths to create value but are confident that continued successful execution of our current plan will produce value for our shareholders far in excess of $66 per share," Folino said in a press release.

The company's refusal to undergo a due diligence request from the bidders remained a sticking point between the two sides.

"We would increase our offer based on the value revealed to us in due diligence. We are confident the diligence process can be executed efficiently and quickly," said the letter signed by Massey and Koffey.

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Oct. 23: With record 3Q earnings, CoreLogic makes a case against takeover

Boasting total 3Q revenue growth of 16% year-over-year, CoreLogic sought to fight off any momentum on the takeover effort.

"CoreLogic is firing on all cylinders," Martell said during the company's earnings call."

Specifically addressing the hostile bid for the company, after reiterating CoreLogic's board is "open to all pathways to create value," Martell then said, "Senator's and Cannae's continuing shifting stream of misinformation in support of their opportunistic attempts to acquire CoreLogic deliberately ignores the facts."

The hostile bidders responded with a letter on the day before the earnings became public.

CoreLogic "underperformed peers by 145% over the past five years, consistently ranks in the bottom 4% of the entire Russell 3000 for missing market expectations, has not met any of its long-term targets and consistently produces negative organic growth," the letter stated.

"This same board has now denied diligence access, attempted to invite regulatory scrutiny around a potential transaction, done shareholders a disservice by playing games with the special meeting and has undermined multiple attempts at constructive engagement," Senator and Cannae wrote.

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Oct. 28: CoreLogic says it has other interested bidders

CoreLogic said it was in discussions with unnamed suitors for a transaction that valued the company at $14 per share more than the bid from Senator Investment and Cannae Holdings. That caused the company's stock to shoot up to $76.98 per share from $67.67.

"In light of recent market speculation, CoreLogic today confirmed it is engaging with third parties indicating preliminary interest based on public information in the potential acquisition of the company at a value at or above $80 per share," it said in a press release.

Senator and Cannae dropped their bid two days later.

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Nov. 17: Senator and Cannae remove three CoreLogic directors

Though Senator and Cannae dropped their hostile takeover efforts, the attempt insurrection had one successful result. The momentous meeting of shareholders on Nov. 17 resulted in the replacement of three board members. According to a preliminary analysis, more than 86% of the votes cast by shareholders supported adding the three Senator and Cannae nominees — W. Steve Albrecht, Wendy Lane and Henry "Jay" Winship — to the board.

Approximately half of the votes cast were in favor of removing Folino, Senator/Cannae said. Folino remains on the board.

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