M&A Journal: Management Group Offers to Buy Out NaviSite

July 20th, 2010 by · Leave a Comment

Hosting and cloud provider Navisite (NASDAQ:NAVI, news, filings) [a subsidiary of Time Warner Cable (NYSE:TWC, news)] got itself a buyout offer yesterday.  According to an SEC filing, Atlantic Investors LLC is offering to purchase all outstanding common shares that it doesn't own for $3.05 - they currently own over 36%.  What makes this buyout offer special is that its CEO Arthur Becker and the chairman of the board Andrew Ruhan, have ownership interests in Atlantic.

In other words, this is a management buyout offer.  As is done in these cases, a special committee of independent directors has been formed to evaluate the fairness of the offer and all that.  Since falling dramatically during the market turmoil in late 2008, NaviSite's stock has traded above $3 only briefly this Spring.  But many investors in the company, like many in this sector, believe the company is undervalued.

Hence, just hours after the filing and the PR, no less than four law firms publicly announced investigations into the fairness of the proposed deal.  Not lawsuits mind you, just investigations - pressuring the special committee to push for a higher price no doubt.  The deal does depend on Atlantic's ability to raise financing.

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Categories: Cloud Computing · Datacenter · Mergers and Acquisitions

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