Cannae Holdings and Senator Investment Group Propose Nine Independent, Highly Accomplished Directors for CoreLogic Board and Begin Process to Call Special Meeting
Cannae Holdings, Inc. (NYSE: CNNE), ("Cannae") and Senator Investment Group, LP ("Senator"), which, directly or through affiliated entities, jointly own or have an economic interest equivalent to approximately 15% of the outstanding shares of CoreLogic, Inc. (NYSE: CLGX), (the "Company") today issued an open letter to fellow shareholders. In the letter, Cannae and Senator announce that they have initiated the process to call a special meeting of shareholders (the "Special Meeting") to elect nine independent and highly accomplished directors to the CoreLogic Board of Directors (the "Board").
The full text of the letter follows and is available at www.UnlockingCoreLogic.com.
July 29, 2020
Dear CoreLogic Shareholders:
Since announcing our proposal to acquire CoreLogic for $65.00 per share in cash one month ago, we have received widespread support from our fellow CoreLogic shareholders. You have made your expectation resoundingly clear: the Company should engage in good faith and promptly carry out a sales process aimed towards maximizing value.
Unfortunately, CoreLogic and its advisors have instead chosen to employ a series of defensive maneuvers aimed at eliminating this opportunity. Tactics have included rejecting our proposal without speaking to us, increasing the Company's share count in order to dilute our beneficial ownership below the 10% threshold required to call a Special Meeting, adopting a poison pill to delay our calling a Special Meeting, inciting regulatory scrutiny, obfuscating organic growth in order to support aggressive projections, immediately issuing press releases following the only private communications we have had, and summarily rejecting our request for access to diligence materials that would enable us to evaluate the possibility of increasing our proposal. This is the same Company that enjoyed ironclad protection from acquisition offers by placing an unusual, decade-long purchase right in its founding documents that only expired in June.
While CoreLogic may explain away each one of these actions, the combination paints a clear picture. If these are not just delay tactics, the Company has the opportunity now to promptly call a Special Meeting in early October - the date shareholders could have reasonably expected a meeting before the Company began all of this gamesmanship. We suspect they will not.
We therefore are moving forward with the process of calling a Special Meeting to remove a majority of the Board and replace them with highly-qualified, independent directors who have no affiliation or association with Senator, Cannae, or any of our affiliates. These candidates have extensive experience overseeing and advising public companies as well as evaluating and executing value-maximizing transactions. Over half of the slate has served as CEO or Chair of a large organization and all of them possess expertise in financial, operational, or corporate governance matters.
Below we detail the need to call a Special Meeting and introduce the nominees.
We Have Offered Compelling Value and Deal Certainty from a Uniquely Qualified Buyer
On June 26th we made a proposal to acquire CoreLogic for $65 per share in cash following nine months of extensive "outside in" due diligence. This all-cash offer is compelling because:
Research analysts agree:
The Company Has Deployed a 'Scorched Earth' Defense
Despite our multiple meeting requests, CoreLogic refused to engage with us until first rejecting our proposal and then proceeding to roll out a series of defensive measures, including:
Analysts are skeptical of CoreLogic's multi-year guidance and unaffected share price argument:
We Have Told CoreLogic We Are Open-Minded on Value - But Need Diligence
Despite the above, we have attempted to continue engaging constructively. To that end, we wrote privately to the CoreLogic Board that we are open-minded as to value and invited the Company to demonstrate why we should offer more by providing us with access to due diligence materials. That process would permit us to understand product-level profitability and growth. CoreLogic rejected that opportunity, choosing instead to immediately publicly announce that it was turning us down again.
Our request for diligence is reasonable and sincere. Despite nine months of "outside in" research, it is surprisingly difficult for shareholders to determine the true organic growth rate of CoreLogic. Over the past years, the Company has re-segmented financials and discontinued reporting of certain KPIs multiple times. While on multiple earnings calls the Company has referred to growth excluding mortgage market impact as "essentially flat", we calculate that growth has actually been negative. In more recent quarters, the Company has altered its typical mortgage volume disclosures with the effect of understating mortgage tailwinds and thereby overstating organic growth (by "netting" AMC transformation and market share losses against mortgage volume gains). As further evidence of the lack of real growth, we note that the Company's unadjusted organic growth has an over 95% correlation to growth in year-over-year mortgage unit volumes - with 2nd quarter 2020 results actually a bit lower than the regression would predict.
Research analysts have noted this lack of clarity even in the Company's most recent quarter:
CLGX highlighted 5% organic growth in 2Q20; however, we estimate a single-digit decline to flat organic revenue growth including COVID-19 impacts but excluding mortgage tailwinds and normalizing for the AMC transformation/shutdown of noncore software. - Deutsche Bank, July 23
The market is aware of the significance of this phenomenon, irrespective of the Company's statements. Last week CoreLogic touted how it had consistently met its quarterly guidance over the past couple of years. Yet, the reality is that the Company's stock price has declined 10 of the last 12 earnings days. Over the past two years the Company ranks in the bottom 4% of the entire Russell 3000 for frequency of quarters with negative stock reactions. Stunningly, the Company also ranks in the bottom 4% of the entire Russell 3000 for the magnitude of those declines. A stark example of this disjuncture-between a Company that celebrates meeting quarterly guidance and shareholders who are punished by it-is the 3rd quarter of 2019 when CoreLogic met the midpoint of its guidance, yet the stock declined 14% that same day.
If CoreLogic is certain, as they state in the presentation that accompanied their rejection of our proposal, that "the Company is at a compelling inflection point with double digit growth and record profitability and FCF," then why won't they grant us access to diligence? We will pay for value in excess of our proposal.
We Are Moving Forward with the Process of Calling a Special Meeting and Will Propose Nine Independent, Highly Accomplished Directors
We will seek to replace a majority, but not the entirety, of the Board. This will not be a vote to sell the Company to us for $65 per share. Rather, it will be a vote to put in place these nine independent directors who will act in the best interest of all shareholders:
We Still Hope CoreLogic Will Engage with Us
We appreciate the widespread shareholder support we have received. As we stated in our June 26th letter, we expect that we would be able sign a definitive merger agreement and announce the transaction within one month after the Company provides due diligence access and believe that, once signed, we will be able to consummate the transaction within two to three months. Calling a Special Meeting to replace directors introduces delay and is a suboptimal outcome for all.
We sincerely hope we can find common ground with CoreLogic. But if we cannot, we remain committed to the transaction and allowing shareholders to vote and decide for themselves.
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
Senator Investment Group LP, Cannae Holdings, Inc. and the other Participants (as defined below) may file a solicitation statement and/or proxy statement and accompanying proxy card with the Securities and Exchange Commission (the "SEC") to be used to solicit consents or proxies with respect to the calling of and approval of the proposals presented at a special meeting of stockholders (the "Special Meeting") of CoreLogic, Inc., a Delaware corporation (the "Company"). If the Participants file any definitive solicitation statement and/or definitive proxy statement with the SEC, the Participants will mail such definitive proxy statement and a proxy card to each stockholder of the Company entitled to vote at the Special Meeting.
The participants in the solicitation are (i) Senator Investment Group LP ("Senator"), the investment manager of the Senator Funds (as defined below), (ii) Senator Management LLC ("Senator GP"), the general partner of Senator, (iii) Senator GP LLC ("Senator GP LLC"), the general partner of SGOM (as defined below), (iv) Senator Master GP LLC ("Senator Master GP"), the general partner of SFS (as defined below), (v) Mr. Douglas Silverman ("Mr. Silverman"), the Chief Executive Officer of Senator, (vi) Senator Focused Strategies LP ("SFS"), (vii) Senator Global Opportunity Master Fund LP ("SGOM" and, together with SFS, the "Senator Funds"), (viii) Cannae Holdings, Inc. ("Cannae") and (ix) Cannae Holdings, LLC ("Cannae Holdings"), a wholly-owned subsidiary of Cannae (collectively, the "Participants").
THE PARTICIPANTS STRONGLY ADVISE ALL STOCKHOLDERS OF THE COMPANY TO READ THE SOLICITATION STATEMENT AND/OR PROXY STATEMENT AND OTHER SOLICITATION OR PROXY MATERIALS IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH MATERIALS WILL BE AVAILABLE AT NO CHARGE ON (News - Alert) THE SEC'S WEBSITE AT WWW.SEC.GOV.
As of the date hereof, (i) SFS directly owns 2,176,190 shares of common stock, par value $0.00001 per share, of the Company (the "Common Stock"), (ii) SGOM directly owns 2,030,000 shares of Common Stock and (iii) Cannae Holdings directly owns 2,300,000 shares of Common Stock. Additionally, as of the date hereof, SFS is party to cash-settled total return swaps referencing 3,942,810 shares of Common Stock in the aggregate and total return swaps and over-the-counter forward purchase contracts referencing 1,435,000 shares of Common Stock in the aggregate.
As described in the Schedule 13D filed with the SEC by Senator, Cannae and certain of their respective affiliates with respect to the Company, each of Senator, Senator GP, Senator GP LLC, Senator Master GP, Mr. Silverman, Cannae and Cannae Holdings may be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) 7,941,190 shares of Common Stock (the "Shares") and, therefore, each such Participant may be deemed to be the beneficial owner of all of the Shares. The Shares collectively represent approximately 9.99% of the outstanding shares of Common Stock based on 79,458,522 shares of Common Stock outstanding as of July 21, 2020, as reported in the Company's Quarterly Report on Form 10-Q filed on July 27, 2020.
This communication does not constitute an offer to buy or solicitation of an offer to sell any securities or a recommendation to buy or sell any securities.
Forward-Looking Statements and Risk Factors
This press release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements regarding our expectations, hopes, intentions or strategies regarding the future are forward-looking statements. Forward-looking statements are based on management's beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to: changes in general economic, business and political conditions, changes in the financial markets and changes in the conditions resulting from the outbreak of a pandemic such as the novel COVID-19 ("COVID-19"); the overall impact of the outbreak of COVID-19 and measures to curb its spread, including the effect of governmental or voluntary mitigation measures such as business shutdowns, social distancing, and stay-at-home orders; our potential inability to find suitable acquisition candidates, acquisitions in lines of business that will not necessarily be limited to our traditional areas of focus, or difficulties in integrating acquisitions; significant competition that our operating subsidiaries face; compliance with extensive government regulation of our operating subsidiaries; risks associated with our split-off from Fidelity National Financial, Inc., including limitations on our strategic and operating flexibility related to the tax-free nature of the split-off and the Investment Company Act of 1940; and risks and uncertainties related to the success of our externalization.
This press release should be read in conjunction with the risks detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of Cannae's Form 10-Q,10-K and other filings with the Securities and Exchange Commission.
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