- Additional Proxy Soliciting Materials (definitive) (DEFA14A)
June 07 2010 - 5:06AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
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Filed by a Party other than the Registrant
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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info
GROUP Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined):
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(4)
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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Presentation to Investors
June 2010
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Forward Looking Statements
This document includes forward looking statements based on estimates and assumptions. Forward-looking statements include
statements containing words such as "believes," "estimates," "anticipates," "continues," "contemplates," "expects," "may," "will,"
"could," "should" or "would" or other similar words or phrases. Forward-looking statements also include statements pertaining to:
implications of current financial results on future financial performance, the Company's ability to achieve future cost savings, future
investment requirements, revenue forecasts, EBITDA forecasts and sustainability of cost cutting measures. These statements, which
are based on information currently available to us, are not guarantees of future performance and may involve risks and uncertainties
that could cause our actual growth, results of operations, performance and business prospects, and opportunities to materially differ
from those expressed in, or implied by, these statements. These forward-looking statements speak only as of the date on which the
statements were made and we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking
statement included in this document or elsewhere. These statements are subject to risks, uncertainties, and other factors, including,
among others:
the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;
the inability to complete the Merger due to the failure to obtain stockholder approval or the failure to satisfy other conditions
to consummation of the Merger;
the failure of CCMP to obtain the necessary debt or equity financing;
the failure of the Merger to close for any other reason;
that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a
result of the Merger;
the effect of the announcement of the Merger on our customer relationships, operating results and business generally;
the ability to recognize the benefits of the Merger;
the amount of the costs, fees, expenses and charges related to the Merger;
and other risks detailed in our current filings with the SEC, including our most recent filings on Forms 10 Q and 10 K. Many of the
factors that will determine our future results are beyond our ability to control or predict. In light of the significant uncertainties inherent
in the forward-looking statements contained herein, readers should not place undue reliance on forward-looking statements, which
reflect management's views only as of the date hereof. We cannot guarantee any future results, levels of activity, performance or
achievements. The statements made in this document represent our views as of the date hereof, and it should not be assumed that
the statements made herein remain accurate as of any future date. Moreover, we assume no obligation to update forward-looking
statements or update the reasons that actual results could differ materially from those anticipated in forward-looking statements,
except as required by law.
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Non-GAAP Financial Measures
In addition to presenting results determined in accordance with generally accepted accounting principles, or
GAAP, this release also presents non-GAAP financial measures. Investors are referred to the tables included in
the appendix of this presentation for a reconciliation of these non-GAAP measures to GAAP financial measures.
Management considers GAAP and non-GAAP financial measures in evaluating the operating performance of
the Company. EBITDA is commonly used as an analytical indicator within infoGROUP's industry. Adjusted
EBITDA, adjusted earnings per share, gross profit, change in working capital, adjusted unlevered free cash flow,
non-GAAP selling, general and administrative expenses, and non-GAAP operating income exclude items that
management believes result from events that are not recurring and are not part of on-going operations.
Management believes these non-GAAP financial measures also provide useful supplemental information to
investors in evaluating the aggregate performance of the Company's operating businesses.
All companies do not calculate non-GAAP measures in the same manner and the non-GAAP financial
measures presented in this press release may not be comparable to similar measures used by other companies.
Non-GAAP measures should be considered supplemental to, and not as a substitute for, or superior to, financial
measures calculated in accordance with GAAP. You should not consider non-GAAP financial measures in
isolation or as a substitute for analysis of the Company's results as reported under GAAP.
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Additional Information About the Transaction
In connection with the Merger, infoGroup has filed a definitive proxy statement and other relevant
documents concerning the transaction with the SEC. STOCKHOLDERS OF infoGROUP ARE
URGED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED
WITH THE SEC BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors and security
holders can obtain free copies of the definitive proxy statement and other documents in the SEC's
public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please
call the SEC at 1 800 SEC 0330 for further information on the public reference room. Copies of the
definitive proxy statement and other documents infoGroup files with the SEC may also be obtained by
mail, upon payment of the SEC's customary fees, by writing to the SEC's principal office at 100 F
Street, NE, Washington D.C. 20549. Our SEC filings, including the definitive proxy statement, are
also available to the public, free of charge, at the SEC's website at http://www.sec.gov. You also may
obtain free copies of the documents infoGroup files with the SEC by going to the "Financial
Information" subsection of our "Investors Relations" section of our website at
http://ir.infogroup.com/sec.cfm. Our website address is provided as an inactive textual reference only.
Information regarding the identity of the persons who may, under SEC rules, be deemed to be
participants in the solicitation of stockholders of infoGroup in connection with the transaction, and their
interests in the solicitation, is set forth in the definitive proxy statement that was filed by infoGroup with
the SEC on May 28, 2010.
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infoGROUP's M&A Committee is independent and focused on
best interests of ALL stockholders
Board has determined that $8.00 per share represents full, fair
and immediate value
M&A Committee conducted thorough sale and go-shop
processes
Process followed and was a result of a comprehensive review of
strategic alternatives
Risk of material decline in Company's share price if the Merger
does not close
1
Board Has Unanimously Recommended Stockholders Vote FOR Proposed
Transaction
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Improved Governance with Additional Independent Directors
Gary Morin (10/30/08) - Former EVP and CFO for Lexmark International, Inc.
Roger Siboni (1/14/09) - Former Chairman and CEO of Epiphany; former deputy
Chairman and COO at KPMG; Chairman of the Board of Directors of infoGROUP
(appointed 7/31/09)
Thomas L. Thomas (1/14/09) - Former President and COO of GXS, Inc., a provider of
B2B technology
Lee Roberts (10/19/09) - Former Chairman and CEO of FileNET, a provider of
enterprise content and business process management; Former GM of Content
Management at IBM
Established an independent M&A Committee in January 2009 comprised of the board
members above (with Lee Roberts joining in October 2009)
All M&A Committee members joined the Board of Directors after most of the
management and Board changes (including the removal of Mr. Gupta as CEO) in 2008
M&A Committee hired legal and financial advisors
Gupta excluded from M&A Committee so as not to taint the independence of the process
All M&A Committee meetings were conducted without Gupta
Limited information provided to Gupta
Board further underscored its independence by:
Eliminating dividend in January 2009, demonstrating that the Board was acting in the
best interest of all stockholders
Gupta previously had annual income of more than $7 million from dividend
payments
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infoGroup Board Took the Right Steps for ALL
Stockholders
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Transaction Overview
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$8.00 per share cash consideration
Purchase Price
CCMP has invested approximately $12
billion in buyout and growth equity since
1984
Spun off from JP Morgan in 2006 as
CCMP Capital Advisors, LLC
Latest fund, CCMP Capital Investors II,
L.P., closed in September 2007 with
commitments of $3.4 billion
Announced in 2009 that Richard
Zannino, former CEO of Dow Jones
Company, joined CCMP as a Managing
Director
Buyer Profile
Source of Funds
($ in millions)
Use of Funds
Source: Proxy Statement filed as of May 28, 2010
(1) $50 million revolving credit facility unfunded at closing.
(2) Estimated by CCMP based upon an estimated closing date. Note that Non-GAAP net debt as of 3/31/10 was $163.3 million. Please see reconciliation of GAAP to Non-GAAP net debt in the
Appendix.
(3) Estimated by CCMP; may be significantly higher.
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Directed the Company to implement cost savings
Realized significant cost-savings - in excess of $25 million in 2009 alone
Formalized management budgeting process and considered strategic alternatives
Attempted to bring focus to core strengths and growth imperatives
Divested Macro International in March 2009
Began to implement business review process
Management budgeting process put in place
Professional approach to investor relations process put in place
Increased dialogue and transparency
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Independent Directors and Management Led Significant Progress in
Turnaround
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Evaluation of strategic alternatives, including remaining independent, began in
December 2008 - CCMP transaction announced on March 8, 2010
Committee appointed January 2009
Generally met weekly throughout the process
Pursued sale process in Q4 2009 only after extensive analysis, significant recovery in
share price and strengthening of credit and equity markets during Q2 and Q3 of 2009
M&A Committee unanimously determined and recommended to the Board that a sale
was in the best interests of the Company and its stockholders
Unanimous Board approval to pursue sale, and the resultant transaction
Based on determination that the transaction was in the best interests of the
Company and its stockholders
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Extensive and Thorough Board Process
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M&A Committee managed the bid process to obtain the highest price available
Engaged more than 50 potential strategic and financial buyers
Over 30 parties executed confidentiality agreements
11 parties submitted preliminary proposals
All were invited to continue more detailed due diligence
9 of the 11 parties did not submit final proposals to acquire the company -
reasons included:
Inability to submit offer at or above market price ($7.62 at the time)
Less favorable view relative to management's financial plan and view of
future growth prospects absent a material transformation of, and investment
in, the business, with an associated high degree of execution risk
Lack of comfort with the Company's financial and strategic plans put forth by
management given the perceived insufficient supporting detail and
inadequate historical data
Increasingly competitive landscape with significantly reduced barriers to entry
Disparate nature of the Company's portfolio of products and services
A perceived need for significant senior management changes
Limited bank financing available for an acquisition of infoGROUP
Two parties submitted final proposals to acquire the Company, including draft
merger agreements, debt and equity financing commitments, etc.
The infoGROUP Board and its advisors determined that CCMP Capital's proposal was
superior to the alternative in terms of price and other material terms
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Robust Sale Process Included both Strategic and Financial
Parties
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On February 12, 2010, CCMP Capital submitted a proposal to acquire all of the
Company's outstanding common stock at a price of $8.40 per share
Following negotiations, CCMP Capital raised its proposed price to $8.50 per share,
and then subsequently to $8.60 per share
Between February 18 and March 4, as part of CCMP Capital's confirmatory due
diligence investigation, the firm held discussions with company management to review
year to date preliminary results through February 2010
On March 4, CCMP Capital lowered its proposed price to $7.60 per share and
highlighted the following reasons for the reduced bid:
YTD financial results were materially below 2010 budget, including the
underperformance of the software solutions division of Infogroup Interactive
Limited evidence to support the Company's ability to achieve the budget
The final debt commitment package received from Bank of America was materially
different than the original debt commitment package provided at the time of
submission of CCMP's original bid on February 12 as a result of Bank of America
completing its due diligence and receiving final internal approval
Notably, the amount of funded debt was reduced from $350mm to $315mm
and the definition of Adjusted EBITDA was unfavorably changed
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Background on CCMP Capital Offer
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The M&A Committee terminated all discussions with CCMP as a result of the price
reduction
On March 6, CCMP contacted Evercore to indicate an increase in their proposed price
to $7.80
Again, CCMP was told the offer price was insufficient to reengage
On March 7, CCMP indicated to Evercore that it might be willing to consider a limited
"go shop" period
Negotiations were held with CCMP to raise its revised bid to $8.00 per share and
allow the Company to pursue a 21-day "go shop" period
CCMP accepted
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Background on CCMP Capital Offer (cont'd)
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Company actively solicited superior offers for 21 days following the CCMP
announcement
The go-shop period confirmed that the CCMP transaction is the best available offer for
infoGROUP
All 10 parties (other than CCMP) that submitted preliminary proposals were
contacted, and others who expressed unsolicited interest were invited to
participate
No additional proposals were received
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Go-Shop Process to Maximize Value
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Recent financial underperformance
Revenue declined year over year by 6% in 2008 and 15% in 2009, as adjusted for full-
year impact of acquisitions
Since January 2009, the Company had missed its revenue budget during each reported
fiscal period, including YTD through February
Non-GAAP Adjusted EBITDA shortfall was 13% YTD through February versus budget,
and implications of such shortfall on a heavily back-end loaded full-year budget
Slowing growth and material budget shortfall YTD through February of the primary
growth engine of the Company's digital data solutions strategy and the impact it would
have on organic growth prospects
Additional cost savings may be increasingly difficult to achieve and that without revenue
growth, such reductions are the only avenue available for continued earnings growth
Significant execution risks associated with the strategic plan
Necessary changes to the management team at multiple levels
Reorganization and consolidation of the Company's 31 independent operating units into
a more manageable number of integrated units
Required future investment in IT to manage the Company and deploy its products to
customers
Unification of product development function
Increasing competition
Many of the emerging competitors have a significant head start with providers and
customers of digital data
Reduced barriers to entry
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Committee Considered Significant Operational
Challenges
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Historical and Projected Financial Performance ($ in
millions)
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Historical Non-GAAP Revenue (1)
Revenue Forecast (2)
(1) Source: April 28, 2010 8K. 2007 figures adjusted for full year impact of acquisitions. Please see reconciliation of GAAP to Non-GAAP revenue in the Appendix.
(2) Source: May 28, 2010 Schedule 14A.
(3) February results were preliminary at the time of signing of the definitive agreement.
(4) Source: May 3, 2010 8K.
Organic revenue declined over the past
couple of years
2010 top-line rebound forecasted but
had fallen short of expectations to date
Primary digital growth product
materially missed budget
2011 - 2014 forecast assumed
accelerating top-line growth with little
evidence or previous investment to
support the revenue assumptions
Declining Historical Performance with Turnaround
Uncertainty
($ in millions)
YTD Through Feb 2010 Results (3)
Q1 2010 Actual Revenue Performance (4)
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Non-GAAP Adjusted EBITDA missed
budget YTD through February 2010
Profit improvements year over year
driven by cost cutting, which is not
sustainable longer term
Absent this, profitability would have
declined further
Lack of recent profit transparency given
the significant addbacks of expenses
deemed one-time and non-recurring in
nature
Significant investments required to
transform business with execution risk,
and not part of forecast
Profit Growth Sustainability Uncertain
($ in millions)
(1) Non-GAAP Adjusted EBITDA does not add back recurring stock-based compensation expense. Please see reconciliation of GAAP to Non-GAAP EBITDA in the Appendix.
(2) Source: May 28, 2010 Schedule 14A.
(3) February results were preliminary at the time of signing of the definitive agreement.
YTD Through Feb 2010 Results (3)
Non-GAAP 2009 Adjusted EBITDA (1)
Non-GAAP Adjusted EBITDA Forecast (2)
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Source: Factset
(1) Reflects the closing price on 10/30/09, which was the last closing price prior to press reports of sale process with third parties.
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10/31/09: Omaha World
Herald reports IUSA taking
bids to sell the company;
stock increased 17% from
$6.56 to $7.65
Offer price represents a significant premium to closing prices during the past two years prior to the
press reports of a sale process
There is risk of a material decline in the Company's share price if the Merger does not close,
particularly in light of the significant increase in the Company's share price that occurred
subsequent to the press reports of a transaction process and discussions with potential acquirers
CCMP Capital's Offer Represents a Significant Premium for
Stockholders
11/10/09: Reports emerge
that 10 parties are in the
process, specifically naming
D&B, Acxiom and Carlyle
2/26/10: Omaha
World Herald
reports IUSA is in
final negotiations
to be acquired by
CCMP for $8.60
per share
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One Year
Two Years
Source: FactSet
Note: Based on closing share price.
(1) Represents percentage of days between 3/5/09 through 10/31/09.
(2) Represents percentage of days between 3/5/08 through 10/31/09.
Excluding the period subsequent to the press reports of a sale process, infoGROUP's share price did not
close above $8.00 on any trading days during the two year period leading up to the transaction
announcement
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A Significant Premium for Stockholders (cont'd)
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Record date for stockholder vote May 27, 2010
Distribution of proxy materials May 28, 2010
Stockholder meeting June 29, 2010
Anticipated closing of transaction June 30, 2010
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Roadmap to Completion
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infoGROUP's M&A Committee is independent and focused on
best interests of ALL stockholders
Board has determined that $8.00 per share represents full, fair
and immediate value
M&A Committee conducted thorough sale and go-shop
processes
Process followed and was a result of a comprehensive review of
strategic alternatives
Risk of material decline in Company's share price if the Merger
does not close
16
Board Has Unanimously Recommended Stockholders Vote FOR Proposed
Transaction
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17
Reconciliation of GAAP to Non-GAAP Net Sales
($ in millions)
Source: April 28, 2010 8K
Note: Net Sales is equivalent to Revenue used elsewhere in this presentation.
(1) Data Group for 2007 includes a full year of results for the following acquisitions: expresscopy.com, SECO Financial.
(2) Services Group for 2007 includes a full year of results for the following acquisitions: Direct Media, Inc.
(3) Research Group for 2007 includes a full year of results for the following acquisitions: NWC Research, Guideline, Inc., Northwest Research Group.
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Reconciliation of 2009 GAAP to Non-GAAP EBITDA
($ in millions)
Source: April 28, 2010 8K
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Reconciliation of GAAP to Non-GAAP Net Debt (March 31, 2010)
($ in millions)
Source: May 3, 2010 8K
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