Cannae and Senator’s Offer to Acquire CoreLogic
at $66.00/Share Represents 39% Premium to Unaffected Share Price –
Open to Raising Bid if Granted Diligence
Current Board Has Overseen Substantial Value
Destruction, With Company Underperforming Peers by 145% Over the
Past Five Years
CoreLogic Has Never Organically Grown Revenue –
Yet Misleadingly Attempts to Use Acquisitions to Claim Growth
Given Current Board’s Unwillingness to Engage,
Nine New, Truly Independent Directors Are Needed to Work to
Maximize Value for All Shareholders
Vote on the GOLD Card TODAY to Protect Your Investment in
CoreLogic
Cannae Holdings, Inc. (NYSE: CNNE), (“Cannae”) and Senator
Investment Group, LP (“Senator”), which, directly or through
affiliated entities, jointly own or have an economic interest
equivalent to approximately 15% of the outstanding shares of
CoreLogic, Inc. (NYSE: CLGX), (the “Company”), today sent a letter
to the Company’s shareholders in connection with the filing of
their Definitive Proxy Statement. The letter outlines the case for
electing nine new independent directors to the CoreLogic Board to
ensure that the Company carries out a legitimate sales process
aimed at maximizing value for all shareholders.
The full text of the letter follows. For more information, and
to view the full Definitive Proxy Statement, please visit:
www.UnlockingCoreLogic.com.
September 25, 2020
Dear CoreLogic Shareholders,
To Protect the Value of Your
Investment Vote on the GOLD
Card
Since we first announced our proposal to acquire CoreLogic three
months ago, you have made your expectation resoundingly clear:
CoreLogic should engage in good faith and promptly carry out a
legitimate sales process aimed towards maximizing value for all
shareholders. One need look no further than the 40+% rise in the Company’s stock price since our
involvement, or CoreLogic’s largest shareholder for over
seven years selling their entire 17% position around our proposal
price, to see that this is what shareholders want.
Unfortunately, in a series of increasingly hyperbolic and
blatantly misleading communications, CoreLogic’s Board has
demonstrated that it has no intention of engaging constructively.
Rather than allow targeted diligence that could yield a higher
offer or elect to commence a process that could ensure a sale to
the highest bidder, the Board has deployed a barrage of defensive
tactics and attempted to paint a picture of us opportunistically
trying to acquire the Company at the precise moment of a terrific
inflection, all while making no mention of its decade of
underperformance.
Here are the facts:
1. We have offered compelling value and deal certainty from a
uniquely qualified buyer
- We have proposed to acquire CoreLogic for $66 per share in cash
and stated we are open to increasing our
offer if allowed targeted diligence that supports a higher
value.
- High premium: Our offer represents a 39% premium to the
Company’s unaffected price and a 28% premium to the Company’s
52-week high, 1.8x and 2.2x greater than average premiums in this
industry respectively.
- High multiple: Accounting for either CoreLogic’s growth
or its historical EBITDA-multiple range, our offer represents a
multiple well in excess of transactions in the industry.
- Regulatory certainty: We know there is no material
antitrust risk to a combination as neither Cannae nor Senator have
a single overlapping business with CoreLogic. Nonetheless, we have
committed to signing a ‘Hell or High Water’ provision which means
no matter what antitrust issue may arise, we are required to accept
the regulatory fix and close the transaction. We have thereby
removed regulatory risk to shareholders.
- Uniquely qualified buyer: Cannae is led by William P.
Foley II (Bill Foley), a preeminent operator and investor with an
established track record resulting in over $100 billion of market
capitalization created for investors. With a ‘highly confident’
letter secured from Bank of America and more than sufficient equity
capital, we are uniquely positioned to offer maximum value and are
precisely the buyer with whom CoreLogic should engage.
2. CoreLogic’s Board has demonstrated poor stewardship for
years – at the expense of shareholders
- Substantial underperformance: Measured against peers
selected by CoreLogic’s own Board, the Company has underperformed by 145% over the past 5 years.
Against any relevant peer group1 over any relevant time period, the
underperformance is shocking:
CLGX performance vs
1 year
3 years
5 years
10 years
Peers Selected by CoreLogic’s Own
Board
-4%
-77%
-145%
-532%
Broader Peer Group Set
-8%
-90%
-161%
-634%
- Never achieved even one of its long-term targets: Since
2011, CoreLogic has set and reset its three multi-year business
objectives over nine times and has never met a single one of them.
In 2011 CoreLogic announced it would achieve 30% EBITDA margins by
2013. Not only did the Company miss this target, but also it took
an additional six years to finally reach 30% – nine years
since first setting the target and only with the benefit of today’s
mortgage boom.
- Consistently misses expectations, ranking in the bottom 4%
of the entire Russell 3000: Out of 3,000 companies in the
Russell, CoreLogic ranks in the bottom 4% for BOTH the frequency and the severity of negative
stock reactions to its earnings over the past two years.
- Never able to achieve organic revenue growth, but hides
behind acquisitions and misleading statements: CoreLogic’s
revenue in 20132 was $1.4 billion and for 2020 it is expected to be
$1.9 billion, a difference of $530 million. Yet during this same
time period, CoreLogic spent $1.7 billion (~50% of its unaffected
market capitalization) acquiring $720 million of revenue net of
foreign currency headwinds. This shows a residual organic loss of
$190 million of revenue. But in recent
shareholder letters, CoreLogic claims a 6% revenue CAGR, making no
mention that organic revenue growth has consistently been negative
and all incremental revenues have come via acquisition not
actual growth. Over any multi-year period M&A has accounted for
over 100% of incremental revenues.
3. By refusing to engage with us, the Board is not acting in
shareholders’ best interests
- Refusing diligence: The Board is withholding information
necessary for us to assess raising our offer.
- Undermining constructive communication: After each of
our efforts at private dialogue, CoreLogic has immediately
responded with hyperbolic and critical press releases that include
unnecessary ad hominem attacks.
- Inciting regulatory scrutiny: Despite our
‘hell-or-high-water’ commitment and neither Cannae nor Senator
having any overlapping businesses with CoreLogic, the Board has
made numerous public accusations of anti-trust issues in order to
invite regulatory scrutiny and delay any deal.
- Impeding shareholders’ ability to vote at a Special
Meeting: The Board has played endless games with the Special
Meeting, including: diluting our ownership below the 10% Special
Meeting threshold and adopting a poison pill requiring a lengthy
solicitation process, calling for the meeting to be on the absolute
last day the Company could be required to hold it, publicly
announcing the meeting while privately threatening us that the
Board can refuse to replace directors and unilaterally reschedule
the Special Meeting, and setting and canceling record dates in an
effort to reduce vote turnout.
- Making misleading and disingenuous statements about
value: Claiming the Company happens to be at a “compelling
inflection point” just as we made our proposal, the Board claims
CoreLogic’s results are not driven by the current surge in mortgage
volumes and that the Company should be valued similar to selected
‘Information Services Peers’ due to CoreLogic having similar
growth. As a result of this analysis, the Board has put forward a
valuation of over $100 per share, implying a greater than 100%
premium. Nowhere in its materials does the Board admit (1)
CoreLogic’s organic revenue growth has been negative while such
peers are growing at over 5%, (2) Consensus forward revenue
estimates expect CoreLogic to grow 1% while such peers will grow
over 6%, and (3) Consensus forward EBITDA estimates expect
CoreLogic to not grow while such peers will grow over 10%. This is
why CoreLogic has underperformed those peers by 145% over the past
5 years and has never traded anywhere close to their multiples.
Perhaps most shocking is the clear evidence that CoreLogic knows
its claims on value are false. In 2019, the Board reset the peer
group it would use for compensation purposes and did not add a
single one of the peers it is now claiming are appropriate. The
Board’s rationale at the time was that the Company’s results and
valuation were largely driven by “the volatile demand factors” of
“mortgage origination volumes and interest rates.” So, when
deciding how to compensate themselves, the Board claims its results
are driven by mortgage volumes and it is unfair to compare them to
‘Information Services Peers,’ but, when deciding whether to deliver
appropriate value to shareholders, the Board now claims the
opposite? Making such blatantly false claims reveals a board that
has no intention of engaging in a real discussion on value.
4. New independent directors are needed to protect
shareholder value
- Each current board member presided over a period of
CoreLogic’s underperformance: The four longest tenured
directors have allowed CoreLogic to underperform peers by 532%.
Other directors have overseen underperformance of 323%, 247%, and
75% depending on their respective tenure, in materials sent to
shareholders, the Board has cited their tenure on the Board of
CoreLogic as qualification for continuing to serve but in light of
this persistent underperformance we disagree.
- Board tenure undermines independence: At the upcoming
2021 Annual Meeting, a majority of the Board will have tenures over
nine years – a duration that many governance groups say calls into
question director independence, especially if any of them are Chair
of committees. The Chair of each committee of CoreLogic’s Board as
well as of the Board itself all have tenures over nine years.
- New, independent directors will bring a much needed fresh
perspective: We have proposed nine highly-qualified and
independent directors who have no affiliation or association with
Senator, Cannae, or any of our affiliates. Furthermore, these
individuals have no affiliation with each other. These candidates
have extensive experience overseeing and advising public companies
as well as evaluating and executing value-maximizing transactions.
Over half of them have served as CEO or Chair of a large
organization and all of them possess expertise in financial,
operational, or corporate governance matters. They bring precisely
the unbiased and clear perspective sorely needed at CoreLogic.
We have tried to engage constructively with CoreLogic’s
Board, and we still hope they will engage with us.
Despite multiple efforts at private dialogue and various ‘olive
branch’ gestures, we have met nothing but resistance from
CoreLogic’s Board. For three months we have focused our commentary
on our proposal and the Board’s response. Even after the Board
released ad hominem attacks against our associates in its September
10th letter, we followed up with a letter seeking a renewed path
forward and increased our offer in an effort to get to a productive
path.
While we will continue to provide relevant information to
shareholders, including CoreLogic’s staggering underperformance,
blatantly misleading materials, and biased Board, make no mistake:
we would much prefer the private and productive dialogue we have
tried to achieve for the past three months. We sincerely hope we
can find common ground with the current CoreLogic Board for the
benefit of all shareholders. However, if we cannot, we remain
committed to this transaction – whether that be a sale to us or a
sale to a higher bidder – and will see this process through.
The time to act is
NOW. To protect the value of your investment vote on the
GOLD Proxy Card “FOR” the removal of ALL nine targeted CoreLogic directors,
“FOR” the election of ALL of
our nine highly qualified nominees and “FOR” the two By-Law
proposals.
If you have any questions or need
assistance voting your shares, please call today D.F. King &
Co., Inc., our proxy solicitor, at (877) 478-5047. Also for
additional information, please visit us at https://www.UnlockingCoreLogic.com.
Sincerely,
/s/ Quentin Koffey
Quentin Koffey
Partner
Senator Investment Group, LP
/s/ Richard N. Massey
Richard N. Massey
Chief Executive Officer
Cannae Holdings, Inc.
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
Senator Investment Group LP, Cannae Holdings, Inc. and the other
Participants (as defined below) have filed a definitive proxy
statement and an accompanying GOLD proxy card with the Securities
and Exchange Commission (the “SEC”) on September 23, 2020 to be
used in connection with the solicitation of proxies with respect to
the proposals to be presented at the special meeting of
stockholders (the “Special Meeting”) of CoreLogic, Inc., a Delaware
corporation (the “Company”), scheduled to be held on November 17,
2020.
The participants in the solicitation are (i) Senator Investment
Group LP (“Senator”), the investment manager of the Senator Funds
(as defined below), (ii) Senator Management LLC (“Senator GP”), the
general partner of Senator, (iii) Senator GP LLC (“Senator GP
LLC”), the general partner of SGOM (as defined below) and SFH (as
defined below), (iv) Senator Master GP LLC (“Senator Master GP”),
the general partner of SFS (as defined below), (v) Mr. Douglas
Silverman (“Mr. Silverman”), the Chief Executive Officer of
Senator, (vi) Senator Focused Strategies LP (“SFS”), (vii) Senator
Focused Holdings LP (“SFH”), (viii) Senator Global Opportunity
Master Fund LP (“SGOM” and, together with SFS and SFH, the “Senator
Funds”), (ix) Cannae Holdings, Inc. (“Cannae”), (x) Cannae
Holdings, LLC (“Cannae Holdings”), a wholly-owned subsidiary of
Cannae, (xi) W. Steve Albrecht, (xii) Martina Lewis Bradford,
(xiii) Gail Landis, (xiv) Wendy Lane, (xv) Ryan McKendrick, (xvi)
Katherine “KT” Rabin, (xvii) Sreekanth Ravi, (xviii) Lisa Wardell
and (xix) Henry W. “Jay” Winship (collectively, the
“Participants”).
THE PARTICIPANTS STRONGLY ADVISE ALL STOCKHOLDERS OF THE COMPANY
TO READ THE DEFINITIVE PROXY STATEMENT THAT HAS BEEN FILED WITH THE
SEC AND OTHER PROXY MATERIALS IF AND WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH MATERIALS
WILL BE AVAILABLE AT NO CHARGE ON THE SEC’S WEBSITE AT
WWW.SEC.GOV.
As of the date hereof, (i) SFS directly owns 100 shares of
common stock, par value $0.00001 per share, of the Company (the
“Common Stock”), (ii) SGOM directly owns 4,110,000 shares of Common
Stock, (iii) SFH directly owns 1,410,000 shares of Common Stock and
(iv) Cannae Holdings directly owns 2,299,900 shares of Common
Stock. Additionally, as of the date hereof, SFS is party to
cash-settled total return swaps referencing 3,942,810 shares of
Common Stock in the aggregate and total return swaps referencing
121,090 shares of Common Stock in the aggregate.
As described in the Schedule 13D filed with the SEC by Senator,
Cannae and certain of their respective affiliates with respect to
the Company, each of Senator, Senator GP, Senator GP LLC, Senator
Master GP, Mr. Silverman, Cannae and Cannae Holdings may be deemed
to have the shared power to vote or direct the vote of (and the
shared power to dispose or direct the disposition of) 7,941,090
shares of Common Stock (the “Shares”) and, therefore, each such
Participant may be deemed to be the beneficial owner of all of the
Shares. The Shares collectively represent approximately 9.99% of
the outstanding shares of Common Stock based on 79,495,658 shares
of Common Stock outstanding as of September 18, 2020, as reported
in the Company’s Definitive Proxy Statement filed on September 22,
2020.
This communication does not constitute an offer to buy or
solicitation of an offer to sell any securities or a recommendation
to buy or sell any securities.
Forward-Looking Statements and Risk Factors
This press release contains forward-looking statements that
involve a number of risks and uncertainties. Statements that are
not historical facts, including statements regarding our
expectations, hopes, intentions or strategies regarding the future
are forward-looking statements. Forward-looking statements are
based on management's beliefs, as well as assumptions made by, and
information currently available to, management. Because such
statements are based on expectations as to future financial and
operating results and are not statements of fact, actual results
may differ materially from those projected. We undertake no
obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise. The risks
and uncertainties which forward-looking statements are subject to
include, but are not limited to: changes in general economic,
business and political conditions, changes in the financial markets
and changes in the conditions resulting from the outbreak of a
pandemic such as the novel COVID-19 (“COVID-19”); the overall
impact of the outbreak of COVID-19 and measures to curb its spread,
including the effect of governmental or voluntary mitigation
measures such as business shutdowns, social distancing, and
stay-at-home orders; our potential inability to find suitable
acquisition candidates, acquisitions in lines of business that will
not necessarily be limited to our traditional areas of focus, or
difficulties in integrating acquisitions; significant competition
that our operating subsidiaries face; compliance with extensive
government regulation of our operating subsidiaries; risks
associated with our split-off from Fidelity National Financial,
Inc., including limitations on our strategic and operating
flexibility related to the tax-free nature of the split-off and the
Investment Company Act of 1940; and risks and uncertainties related
to the success of our externalization.
This press release should be read in conjunction with the risks
detailed in the “Statement Regarding Forward-Looking Information,”
“Risk Factors” and other sections of Cannae’s Form 10-Q, 10-K and
other filings with the Securities and Exchange Commission.
1 Company selected peers are those peers listed in the Company’s
most recent September 22nd investor presentation. Broader Peer
Group Set are BKI, CSGP, EFX, EXPN, FDS, FICO, INFO, MCO, MSCI,
REL, SPGI, TRI, TRU, VRSK.
2 2013 used as starting point because the 2014 10K is the first
annual report that provides comparable disclosures after the
Company restated historical financials following a major
divestiture. However, over any multi-year period M&A has
accounted for over 100% of incremental revenues.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200925005245/en/
Investors: D.F. King & Co., Inc. Edward McCarthy /
Geoffrey Weinberg emccarthy@dfking.com / gweinberg@dfking.com (212)
269-5550 Media: Sloane & Company Dan Zacchei / Joe
Germani dzacchei@sloanepr.com / jgermani@sloanepr.com
Corelogic (NYSE:CLGX)
Historical Stock Chart
From Aug 2024 to Sep 2024
Corelogic (NYSE:CLGX)
Historical Stock Chart
From Sep 2023 to Sep 2024