Largest Web.com holder sells its stake

Okumus Fund Management sells 6 million shares in wake of Jacksonville-based tech firm’s buyout deal.


  • By Mark Basch
  • | 5:20 a.m. June 28, 2018
  • | 5 Free Articles Remaining!
Web.com CEO David Brown said the company could get more than the $25 a share buyout price it agreed to with Siris Capital Group.
Web.com CEO David Brown said the company could get more than the $25 a share buyout price it agreed to with Siris Capital Group.
  • Columnists
  • Basch Report
  • Share

Web.com Group Inc.’s $25-a-share buyout agreement with Siris Capital Group includes a provision to let the company seek higher offers for 45 days.

But the company’s largest shareholder isn’t waiting.

After Jacksonville-based Web.com announced the buyout last Thursday, Okumus Fund Management sold its 6 million shares, according to a Securities and Exchange Commission filing Monday.

The filing shows Okumus sold the shares at prices between $25 and $25.12.

The agreement with Siris includes a “go-shop” period which allows Web.com to seek other offers until Aug. 5. Web.com’s stock has reached a high of $26.15 since the buyout agreement was announced, indicating Wall Street expects a better offer.

During a town hall meeting with employees after the deal was announced, Web.com CEO David Brown said the $25 price is a good one for stockholders.

“We went through a very thorough evaluation of their proposal, and it was very compelling because I think as shareholders, not just ourselves but all of our shareholders, it gives our shareholders immediate cash value and a significant cash value,” he said, according to a transcript of the meeting posted in an SEC filing.

“We’re going to go out to the rest of the world and see if there are other people that might be interested in acquiring us at even a higher price,” he said.

“We’ve inserted into our purchase agreement the ability to entertain offers from other folks to get our shareholders even more consideration, or there may be someone that is just a better fit for us as well. So, we’ll see what the world brings there.”

Brown has deflected questions about a possible buyout of Web.com in recent years, but he said at the meeting that he has been talking to Siris for three years.

“I didn’t wake up yesterday and concoct this idea. This is a company that’s been here many times. They’ve always been interested in us, and it just was the right time and the right place today,” he said in the Thursday morning meeting.

Web.com said last week that it doesn’t expect major changes under Siris’ ownership, and it is going forward with its plans to move into a new Southside headquarters building under development.

“Siris itself doesn’t come in and run companies. They rely on the management teams that are there. They buy good companies with good management teams and good teams themselves, good employee bases, and then they just help us execute the strategy. That’s how they do this,” Brown said.

B. Riley analyst Sameet Sinha said in a research note that Web.com “has struggled to regain its growth footing in the past two years,” so the buyout could be good for the company’s future.

“We believe going private should allow the company to re-tool its product strategy without the pressure from quarterly execution,” he said.

Web.com said the deal is worth about $2 billion. The company has about 50 million shares outstanding, but the $2 billion price includes the assumption of debt.

Okumus owned 12.8 percent of the company’s stock as of March, according to Web.com’s proxy statement.

Okumus had begun buying Web.com shares in 2014 and in early 2015, Web.com agreed with the fund to put two new directors on the board.

Okumus never indicated any disagreement with management, and the company did not say why it agreed to appoint the new directors.

The stock sale by Okumus leaves activist investment firm Starboard Value LP as the largest shareholder. Starboard, which began buying shares in May, has 9.4 percent of the stock, according to a recent SEC filing.

Starboard has not made any public comment or filing about Web.com since the buyout was announced.

Investor James Dahl active again

James Dahl is a well-known Jacksonville investor who has been largely out of the news for the past two decades.

However, last week Dahl disclosed in an SEC filing that he is resuming an activist role with a letter to Pope Resources’ board of directors.

Dahl’s letter said he is the largest shareholder of Pope, a publicly traded limited partnership that owns and manages timberland in the Northwest. He believes the company is undervalued as a limited partnership.

“Recently, I communicated to you the potential benefits that could be derived if Pope were acquired in exchange for stock in a public REIT. Despite the potential benefits that a transaction of this nature could have for all unit holders, you informed me that the Board of Directors and General Partners of Pope are not interested in selling or converting to a REIT,” the letter said.

A REIT, or real estate investment trust, is a real estate company that pays out most of its income as dividends to shareholders.

Dahl’s letter urged other unit holders to lobby the board to take action.

Dahl has experience in real estate and timber investing, according to his biography on the website of Jacksonville investment firm Rock Creek Capital, where he is a founding partner.

It says Dahl has oversight over all of the firm’s real estate investments, and he previously founded a timberland investment firm called Timbervest, which was sold in 2004.

The letter to Pope is included in a Schedule 13D, filings that are made by parties with more than 5 percent of the stock of a public company. According to the SEC database, this was the first 13D filing by Dahl regarding any company since 2004.

GEE Group adds Jacksonville exec

GEE Group Inc. is headquartered outside of Chicago, but the staffing company has hired another Jacksonville executive to a top position.

The company last week announced Kim Thorpe was appointed senior vice president and chief financial officer.

Thorpe’s experience includes a stint as chief financial officer of FPIC Insurance Group Inc., a Jacksonville-based medical malpractice insurer that was bought out in 2011.

GEE’s chief executive officer is Derek Dewan, who joined the company in 2015 after GEE acquired Scribe Solutions Inc., a Jacksonville-based company then run by Dewan.

Dewan is best known for growing Jacksonville-based MPS Group Inc. into a major staffing and consulting company before it was acquired by Adecco Group Inc. in 2009.

Another former MPS executive, George Bajalia, became president of GEE last year.

Thorpe is replacing Andrew Norstrud, who is resigning to pursue other interests, as CFO of GEE.

Norstrud was CEO of GEE before Dewan was brought in after the Scribe deal.

Gun sales still falling at American Outdoor Brands

With firearms sales continuing to drop, the parent company of gunmaker Smith & Wesson is continuing to rely on sales of other outdoor products, including some from a Jacksonville company it acquired.

American Outdoor Brands Corp. last week reported total sales in the fiscal year ended April 30 dropped 33 percent to $607 million.

Adjusted earnings for the fiscal year were 46 cents a share, down from $2.58 the previous year.

Meanwhile, its outdoor products and accessories business grew sales by 21 percent to $157.9 million, bringing the outdoor business to 26 percent of total sales. That business generated 14 percent of sales in fiscal 2017.

The outdoor business operates out of two warehouses, a 100,625-square-foot facility in Jacksonville and another in Missouri, according to American Outdoor’s annual report.

The company acquired the Jacksonville warehouse when it bought Ultimate Survival Technologies in Jacksonville in 2016. UST markets outdoor survival and emergency preparedness gear.

American Outdoor is expecting current trends to continue, projecting fiscal 2019 sales to basically be flat compared with 2018, between $570 million and $600 million. Earnings are projected between 40 cents and 50 cents per share.

 

 

×

Special Offer: $5 for 2 Months!

Your free article limit has been reached this month.
Subscribe now for unlimited digital access to our award-winning business news.