Vertrue sees virtue in a higher buyout price

Posted Jul 24th 2007 9:40AM by Tom Taulli
Filed under: Deals, Private Equity

Back in March, Vertrue (NASDAQ: VTRU), which focuses on direct marketing services, announced a going-private transaction at $48.50 per share. The buyers included the company's management, One Equity Partners, Oak Investment Partners and Rho Ventures.

Well, it hasn't been a cake walk. You see, some investors thought the price was too low – and complained about it. Basically, Vertrue is truly a good business. Last year, revenues hit $659 million and EBITDA was $89.8 million.

No doubt, Vertrue tried to defend the price tag – but has now finally given up. Now, the price tag is $50 per share.

Doesn't seem like a lot? But, according to Brencourt Advisors – with a 28.1% stake – it's enough. And that's all that matters. What's more, the investment firm will have the option to buy a $25 million stake in the private company, which is known as an "equity stub."

Interestingly enough, the deal was too rich for Oak Investment Partners, which walked from the transaction.

To see other M&A transactions, click here.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Tags: Vertrue, VTRU