November 30, 2011 9:23 pm

CoreLogic’s complex sale process advances

This article is provided to FT.com readers by dealReporter—a news service focused on providing insightful intelligence on event driven situations to investors. www.dealreporter.com

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CoreLogic (NYSE:CLGX) has been holding management presentations with potential suitors in recent days, said a source, a person familiar with the matter and an industry source told dealReporter.

On 29 August, CoreLogic, a real estate data and services company that is under pressure from Highfields Capital Management, announced it had formed a special committee to explore strategic alternatives, including a sale. It hired Greenhill Advisors to manage the process. A CoreLogic spokesperson declined to comment for this story.

The source and industry source described the sale process as complicated, noting that multiple rounds of bids have already been taken. These sources said suitors are unclear on CoreLogic’s commitment to a sale, adding that the process has been drawn out and run in an atypical fashion.

The person said it was his understanding that the Santa Ana, California-based company has narrowed the list of suitors and has received a variety of different bids for part of and the whole company. CoreLogic has business and information services as well as data and analytics segments.

Each of the sources said financial sponsors and strategic bidders have been looking at the company.

The industry source said it was his understanding that three private equity consortiums have formed. According to the person, four private equity firms based on the East and West Coasts are taking a look. The identities of the financial sponsors could not be learned.

A data room has been opened for suitors, the person said. The source said he was under the impression that CoreLogic has provided limited information to potential buyers.

At least one bank has indicated it is willing to provide a “semi-staple” to suitors, said the industry source. He and the source said financing is available for a buyout.

CoreLogic’s default services business has seen an uplift in volume owing to the weak economy, but suitors have to factor in a return to normalized earnings for the unit, said the source and industry source. In early November, the company’s 3Q11 results beat analyst expectations, months after CoreLogic’s stock plunged on the back of lowering 2011 guidance during its 2Q11 earnings announcement.

In conjunction with 3Q11 results, the company increased full 2011 adjusted EBITDA guidance to between USD 290m and USD 300m and projected higher annualized cost cutting. For the quarter, CoreLogic reported cash of approximately USD 140m and long-term debt just shy of USD 850m.

During the 3Q11 earnings call, executives said the firm’s independent committee “has been working closely with its advisors in a robust process to evaluate many different alternatives.” It also said it plans to exit five non-core businesses.

The Australian Financial Review reported on 20 November that CoreLogic is considering selling its Australian business, RP Data, which it acquired earlier this year for USD 195m. The industry source said CoreLogic may also be considering divesting other units.

On 20 October, First American Financial (NYSE:FAF), which spun out CoreLogic in June 2010 and still owns a 11.2% stake in the company, filed a 13-D saying it favors strategic alternatives over an outright sale. It also offered the buy CoreLogic if it decided to sell.

The disclosure came more than a month after CoreLogic’s activist investor, which owns a 7.7% stake, updated its 13-D filing to say it believed a sale is in the best interest of shareholders.

In early November, the US District Court dismissed four of the six claims by the FDIC against the company, including the most serious claim of “gross negligence.” The claims originally posed USD 129m in potential damages.

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