CoreLogic rejects unsolicited bid, citing Cannae's ties to rivals
CoreLogic rejected the unsolicited offer for the company from Senator Investment Group and Cannae Holdings, citing in part Cannae Chairman Bill Foley's ties with other mortgage vendors.
"Our board is open to all viable paths to increasing shareholder value, and we are willing to meet with Senator and Cannae, but given CoreLogic's strong momentum, increasing margins, accelerating growth and multifaceted value-creation model, we are unanimous in our belief that CoreLogic will be able to deliver significantly more value to shareholders than this opportunistic proposal," Paul Folino, chairman, said in a press release.
"The proposal also fails to address the serious regulatory concerns raised by significant overlaps between CoreLogic and the network of companies associated with Cannae's chairman, including Black Knight and Fidelity National," he said.
Foley is Black Knight's executive chairman and Fidelity's chairman; he is also the vice chairman of bank technology company Fidelity National Information Systems. CoreLogic is a spin-out of Fidelity's title insurance rival First American Financial.
In a joint statement, Senator and Cannae said that despite the statement about CoreLogic being willing to meet, they have yet to hear back from the company.
"If CoreLogic elects to ignore its shareholders and instead continues with its current course of action, we will call a special meeting to replace the board as early as July 28," the statement said.
Together, Cannae and Senator own or have an economic interest in 15% of CoreLogic's outstanding shares.
They state that CoreLogic hired defense advisory firms weeks ago despite public statements that they had no knowledge of Senator and Cannae's interest.
CoreLogic, they added, 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."
CoreLogic could not be immediately reached for comment on the statements from Cannae and Senator.
Folino pointed at CoreLogic's December 2018 pivot, in which the firm dropped the Dorado loan origination system and default management services in favor of focusing on the appraisal management business.
Those changes led to CoreLogic's best first-quarter results ever, the company said earlier this year.
"CoreLogic today is far more than a play on U.S. mortgage volumes, and our materially increased full-year 2020 financial guidance and new 2021 and 2022 guidance underscore the board's confidence that our strategy is working," Folino said.
"We have increased CoreLogic's share repurchase authorization to $1 billion, demonstrating our confidence in the company's prospects as well as our ongoing commitment to returning capital to shareholders," he said.
CoreLogic raised its adjusted EBIDTA guidance for 2020 to a range of $565 million to $585 million. Prior to the pandemic, the year's guidance featured a range from between $500 million and $525 million. It also set target adjusted EBIDTA of $595 million to $615 million in 2021 and $630 million to $650 million in 2022.
After the announcement of the proposal's rejection, CoreLogic opened on July 7 at $68.60, $1.59 per share higher than the previous close. On June 25, before the offer was announced, CoreLogic closed at $52.93.
Cannae opened on July 7 at $40.28 per share, down $0.27. Among the other things that could have affected Cannae's stock price is its stake in Dun & Bradstreet, whose initial public offering closed on July 6. And, a sign of some of the interplay between Foley-associated companies, Black Knight also is an investor in D&B.