CNET Acquired for 1 5B Offers 45

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CNET Acquired For $1.5B; Offers 45%...

By: Andy Beal
2008-05-23

... Premium to Keep Dissenting Investors Happy. CBS is paying a 45% premium in order to buy CNET for $1.8 billion!

Why?

Why would they offer up a 45% premium for a company thats seen its stock slump recently? Lets speculate shall we?

1. CBS had money burning a hole in its pocket.
2. CNET had more than one suitor, so enjoyed a behind the scenes bidding war.
3. CBS wanted to offer enough of a premium to satisfy its grumbling investors.

My vote is on option 3"with maybe a little of option 1. CBS will clearly benefit from CNETs vast footprint in online media, but I believe the premium is likely an attempt to avoid any conflict with CNETs dissenting investors.

"A group of investors led by New York hedge fund Jana Partners LLC has been agitating for a shake-up at CNet after its shares fell sharply in the past year. Jana Partners has led a proxy fight to get a slate of directors elected to the CNet board.

The investors say CNets management has failed to take advantage of the companys online presence to grow revenue as quickly as the advertising market is increasing."

Had CBS offered a single digit premium for CNETs stock, Jana et alwould have likely complained it wasnt enough, tried to fight the acquisition, and perhaps confused investors with talk of the need for alternative bids.
While Jana Partners spokesman did not have a comment yet, I suspect that the 45% premium is designed to ensure the only comment they make is woohoo!

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About the Author:
Andy Beal is an internet marketing consultant and considered one of the world's most respected and interactive search engine marketing experts. Andy has worked with many Fortune 1000 companies such as Motorola, CitiFinancial, Lowes, Alaska Air, DeWALT, NBC and Experian.

You can read his internet marketing blog at Marketing Pilgrim and reach him at [email protected].


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