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Catalina fetches higher bid

An investment firm's $1.7-billion offer is 2 percent higher than one made by an insider.

By MARK ALBRIGHT
Published April 18, 2007

An insider's bid to take over Catalina Marketing Corp. has been trumped by a $1.7-billion offer from a New York-based investment firm that will take the packaged-goods advertising company private.

Hellman & Friedman LLC, which controls a $16-billion hedge fund that late last week agreed to sell Doubleclick Inc. to Google, will pay $32.50 a share for all of Catalina's outstanding shares.

That's 2 percent, or 40 cents a share, more than the earlier deal struck March 8 and a 34 percent premium to Catalina's share price when the company put itself up for sale in December.

The deal, which came after an insider's bid from Catalina's largest shareholder, ValueAct Capital Partners, was used to prod others to bid, includes $600-million in cash. The rest of the purchase will load down St. Petersburg-based Catalina with about $1.1-billion in new debt in addition to assuming Catalina's existing $136-million debt.

Hellman intends to back Catalina's current management team and its basic strategy, and sees no major changes in the St. Petersburg company's work force of about 1,300. Chairman and chief executive Dick Buell, who has led Catalina through a turnaround, said he likely will sign a multiyear contract to stay.

Unlike the earlier sale to ValueAct, Catalina's current management team will get a significantly higher stake in the ownership. How much has yet to be disclosed.

Hellman had been one of the companies kicking Catalina's tires since at least September. The firm also has had other investments in high-tech marketing and media, such as its interest in consumer-research giant Nielsen Co., German publishing house Axel Springer and ProSieben, a German media and direct-marketing company.

In the past few days, Hellman & Friedman agreed to pay $1.8-billion for Kronos Inc., a Massachusetts staffing company, and got $3.1-billion for Doubleclick Inc., an Internet advertising firm that is being sold to Google Inc. The fund's initial investment in Doubleclick was $315-million.

"They know our space in the marketplace well," Buell said. "No one during this process did more in-depth research and developed a better understanding of this company than Hellman & Friedman."

Catalina is morphing from a company that sold and distributed customized coupons in supermarket checkout counters to more of an advertising company that distributes color ads to customers in supermarkets, discount stores and drugstore pharmacy counters in eight countries. The company, which uses consumer-purchase data to study shopper behavior, also is switching to full-color printers.

ValueAct Capital, which was to get an $8-million fee if its deal was aced out by a higher offer within a set period, is supporting the sale to Hellman. Catalina would face paying Hellman $50.6-million if it backs out for a higher bid before the deal closes this summer.

Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.

[Last modified April 17, 2007, 23:25:52]