Investment idea generation.

Blog

Our thoughts.

Activist Targeted United Online Gets A Buyout Offer

B. Riley & Co. offers to buy United Online (NASDAQ: UNTD) for $12.50 a share. This is a 21% premium to the previous closing price of shares. However, the stock is still down 29% year-to-date. B. Riley owns 7.9% of UNTD. 

This comes after Cannell Capital went activist on UNTD last week. Cannell owns 4.8$ and believed the stock was undervalued. Good timing. Cannell bought shares between $11.00 and $11.30 a share. 

Cannell is part of the Concerned Shareholders of United Online and had planned to discuss the board composition and about nominating some members for the board. 

The history of underperformance and negligence is all over the proverbial wall. Over the last 10 years, despite United Online shares declining over 10% inclusive of dividends, the members of the Company’s executive team have received over $160 million in compensation and the Company’s auditors have been paid in excess of $25 million. Further, over the last 9 years, the members of the Board who have served during such time have each received between $1.5 million and $2.1 million in total compensation, all while shareholders have sustained losses. Compounding matters is that the Board’s minimal ownership of the Company comes in the form of stock option awards and restricted stock unit grants, despite over 70 years of cumulative service on the Board.

B. Riley's thesis:  The fund wants to buyout UNTD now, believing investors are hurting for liquidity in the tremendous time. The company has hired an investment bank and there was the announcement of Cannell's stake, neither of which have held shares up. The stock is down 10% since Cannell's announced stake. They don't want a long sale process and have a go-shop provision to show their seriousness.