Internet services and media company j2 Global, Inc. (JCOM) said Wednesday that it has informed data-backup provider Carbonite Inc. (CARB) of its intention to commence a cash tender offer to acquire all the outstanding shares of Carbonite at $15 per share.
Los Angeles, California-based j2 Global noted that its wholly owned subsidiary, Copper Holdings Inc., will commence the cash tender offer, which will not contain a financing condition. According to the company, the cash offer will provide Carbonite stockholders with "substantial value and immediate liquidity".
j2 Global said it has delivered a letter to Boston, Massachusetts-based Carbonite, indicating its intention to commence the tender offer.
In its letter, j2 Global noted that Carbonite announced the pending acquisition of MailStore Software GmbH for a purchase price substantially higher than j2 would have paid. MailStore Software is a Germany-based provider of email archiving solutions for small and midsize businesses.
"…. Carbonite's Board has been unable to establish a position on our compelling, all-cash proposal, but has fully considered and approved two items—your hiring and the MailStore transaction—that we believe have reduced the value of Carbonite shares to j2 (or another buyer that looks at value in a manner similar to j2) by more than $0.50 per share," J2 Global said in the letter.
Further, j2 Global said it was surprised that after more than two years since it first made an offer to acquire Carbonite, it would take Carbonite's board up to another six weeks to act on an all-cash offer to acquire shares for $15.
j2 Global added that it has asked Carbonite's board to allow it to commence confirmatory due diligence or participate in a process that will deliver greater near-term value to Carbonite's stockholders than its proposal.
"While you mentioned the need to develop a view on intrinsic value, the value reducing actions taken since our offer make continued delay unacceptable to those of us who have been invested in Carbonite for so long," j2 Global said.
Accordingly, j2 Global determined that it was time to take its proposal directly to its fellow stockholders and allow them to weigh in on the extrinsic value it is offering for Carbonite.
The company, however, urged Carbonite to engage in talks and said it looked forward to hearing from Carbonite's board directly on its proposal.
On Tuesday, Engine Capital LP, a large shareholder of Carbonite, warned the data-backup provider not to reject the takeover offer from j2 Global for tactical reasons as that would be playing with fire with other people's money.
Engine Capital, which owns about 2.5 percent of Carbonite, wrote in a letter to the Carbonite board on Tuesday, "The way to create leverage is not by tactically rejecting the j2 Offer, but instead by publicly announcing the initiation of a sale process and engaging with potential bidders."
Engine Capital noted that j2 Global could significantly increase its offer for Carbonite because j2 Global's market capitalization increased by more than $200 million the day of its proposal to buy Carbonite.
In light of the recent $15 per share offer from j2 Global and considering how Carbonite summarily rejected a prior offer from that company more than two years ago, Engine Capital had urged the Carbonite board earlier in the month to immediately start a sale process.
JCOM closed Tuesday's trading at $63.58, down $0.04 or 0.06 percent on a volume of 360,989 shares.
CARB closed Tuesday's trading at $13.60, up $0.13 or 0.97 percent on a volume of 114,681 shares.
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