Despite a call from its former CEO to sell the company, members of InfoGroup’s board of directors said the company would not consider a potential sale at present.
InfoGroup’s response followed a statement from Vin Gupta, the founder and former CEO of InfoGroup who was ousted earlier this year, suggesting the company should consider a sale and naming himself as a potential buyer. In his statement, Gupta said the database and marketing services company should “explore its strategic alternatives” and that he is considering purchasing the company’s outstanding shares and taking it private.
Gupta, who owns about 40% of the shares of InfoGroup, said he would “also be willing to sell his family’s shares in connection with a sale of the entire company,” under appropriate circumstances.
The board “has a great deal of confidence” in the company’s current management team, responded Bernard Reznicek, chairman of InfoGroup’s board of directors, in a statement.
“We understand Mr. Gupta’s concerns, and we share his desire to enhance shareholder value for all the company’s shareholders,” Reznicek said. “In the regular course of discussions of our board of directors, we frequently focus on various opportunities which may present themselves for us to further shareholder interests.”
Gupta was forced out earlier this year as CEO and as chairman of the board of directors following a five-month investigation by a special litigation committee. This followed shareholder lawsuits charging him with excessive expense reimbursements and corporate spending.
Gupta’s stepped down as CEO as part of a settlement agreement relating to the shareholder lawsuit, according to a report filed with the US Securities and Exchange Commission. Gupta was ordered to pay $9 million to the company, after the special committee found that “various related party transactions, expense reimbursements, and corporate expenditures were excessive,” according to a report it issued.
“I believe that the InfoGroup stockholders would benefit from a cash or liquid stock proposal for their shares,” Gupta said in his statement. “I am exploring working with an equity partner to make a cash proposal for the company to the Board of Directors and have retained The Blackstone Group as my financial advisor and Latham & Watkins as legal counsel. However, I want to emphasize that I would also be willing to sell my shares for liquid stock or cash if that proves to be the best transaction for all the stockholders of the company.”
Reznicek said he did not expect the company to have any further comment on the prospects for a sale or other action to increase shareholder value until the board of directors has had time to consider the views of the company’s independent financial advisor.
“In addition to the positive actions we have taken, the present economic environment in general and capital markets in particular suggests that this would be a challenging time to try to maximize shareholder value by selling the company,” he added.
Reznicek said if Gupta does intend to sell shares of the company, the board would cooperate with those efforts.
InfoGroup is enjoying “strong, positive relationships” with its customers and has been successful in developing new customer relationships, said Bill Fairfield, InfoGroup’s CEO, in a statement. He added that he was “proud of the efforts of… employees who have worked diligently through the difficult transition of earlier this year.”
