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Catalina mulls bid to go private

By KRIS HUNDLEY
Published December 9, 2006


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Catalina Marketing Corp. has received an unsolicited buyout bid from a private-equity firm and retained an adviser to consider other possible offers, the St. Petersburg company said late Friday afternoon.

A wire story earlier in the day reported there had been offers for Catalina of about $30 a share, or $1.4-billion, with as many as six private equity-firms interested in the deal.

Those rumors fueled a spurt in the company's stock before trading was halted. After Catalina issued its release, trading reopened to another flurry of speculation, with the stock closing at $29.11, up $4.88, or more than 20 percent, for the day.

Catalina, which has been struggling to boost sagging revenue in its core business of grocery-coupon machines, did not confirm the value of the pending bid or identify the bidder.

The company, which tailors coupons to customers' buying habits, said it hired Goldman Sachs & Co. as a financial adviser. A special committee of Catalina's board has authorized it to solicit and review additional offers. Goldman Sachs holds about 5.3 percent of Catalina's shares.

"No decisions with respect to the sale of the company have been made," Catalina said. "And there can be no assurance that a formal proposal or offer will be presented and, if presented, that a sale transaction will be approved by the board."

Catalina also said it would not comment further on the matter until such time, "if ever," it enters into a definitive agreement.

The bid for Catalina comes at a time when private-equity firms are flush with cash and privatization deals are proliferating.

In the past six months, Tampa's OSI Restaurant Partners Inc., parent of the Outback Steakhouse chain, announced it was going private, and Checkers Drive-In Restaurants, also of Tampa, completed its buyout. HCA, which has nine hospitals in the Tampa Bay area, closed on a $32.7-billion leveraged buyout last month. And Clear Channel Communications, the nation's largest chain of radio stations, said in mid-November that it is being sold to equity firms for $26.7-billion.

Common themes among companies choosing the private sector include a desire to escape quarterly earnings pressure and the intense public scrutiny. Such companies often feel their stock has been undervalued, making them ideal targets for equity funds looking for bargains.

Catalina, whose stock had been trading for about $25 a share before Friday, has been struggling to reignite growth after a few lackluster years. In July, the company said it hoped to capture new corporate customers for its coupons by upgrading its supermarket checkout printers to color.

"Color changes everything for us," Dick Buell, Catalina's chief executive, told shareholders at the annual meeting in August. "We are no longer just a coupon company. We're a communications company."

But Catalina, which had earnings for the last fiscal year of $71.6-million on sales of $417.7-million, is fighting to prove the value of its advertising in an increasingly cluttered market. Catalina argues that its coupons, which react to what each customer buys at the register, reach a highly targeted market.

While its drugstore and international businesses grew in 2006, Catalina's domestic supermarket business, which provided more than half its revenue, continued to shrink over the past two years. Catalina's printers are in about 21,000 U.S. supermarkets.

Catalina, founded in 1983, has about 1,200 employees worldwide with more than 500 at its headquarters in the Carillon office park.

Kris Hundley can be reached at hundley@sptimes.com or 727 892-2996.

 

[Last modified December 8, 2006, 23:20:31]


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