“We see a significant opportunity to grow the company, increase their operating efficiencies and improve the D&B customer experience by providing enhanced business solutions,” Cannae's Bill Foley said of the Dun & Bradstreet.

The Basch Report: Group led by Cannae Holdings agrees to buy Dun & Bradstreet

Fidelity National Financial Inc. spinoff is minority owner in $6.9 billion deal.
By: 
Aug. 16, 2018

When investment company Cannae Holdings Inc. was spun off from Fidelity National Financial Inc. last fall, its most interesting holding was its stake in several restaurant chains.

However, the now independent investment company, which continues to be run by executives of Jacksonville-based Fidelity, made a bigger splash last week. Cannae is leading an investment group that agreed to buy business data firm Dun & Bradstreet for $6.9 billion.

Dun & Bradstreet has been providing information to the business world since 1841 and was one of the go-to sources for Wall Street long before the internet came around.

“We see a significant opportunity to grow the company, increase their operating efficiencies and improve the D&B customer experience by providing enhanced business solutions,” Cannae Chairman Bill Foley said Monday in the company’s quarterly conference call.

“This is a terrific opportunity for Cannae to make a scale investment in partnership with like-minded investors that we know well,” he said.

Cannae is a minority investor in the deal. Foley said the firm’s investment commitment is $900 million, and it expects to syndicate $400 million to $600 million of that to other investors.

However, Cannae will take an active role in managing Dun & Bradstreet, at least in the early stages after the deal is complete.

“The present plan is that I would be executive chairman,” said Foley, adding that Dun & Bradstreet currently is run by an interim CEO.

“We’ll bring in a CEO and some other individuals,” he said.

The new investment comes at a time when Foley seemed to be stepping back from some of his activities. Foley told the Jacksonville Daily Record in May, as his Las Vegas Golden Knights hockey team was getting ready to play in the Stanley Cup finals, that he was focused more on the hockey team than some of his other businesses.

The 73-year-old remains chairman of Fidelity and another Jacksonville-based company spun off from the title insurance company, mortgage technology firm Black Knight Inc.

Cannae is headquartered in Las Vegas, where Foley now lives, but Fidelity executives play a significant role in the investment firm. Cannae President Brent Bickett is executive vice president of Fidelity.

Foley said in Cannae’s conference call that Dun & Bradstreet is “similarly situated” to where Black Knight was a few years ago.

“Their sales efforts are siloed as opposed to cross-selling,” he said.

The firm has also been dealing with management problems, Foley said.

“They have had a series of CEOs over the last seven or eight years, so leadership has been a little bit of an issue with the company,” he said. “I just believe that we can bring some focused leadership to the organization.”

Dun & Bradstreet reported second-quarter adjusted revenue of $394.4 million, down 3 percent after the foreign exchange impact, and flat adjusted earnings of $1.40 a share.

Foley said the investment group expects to bring 3 percent to 5 percent annual growth to the company.

“We’ve spent enough time in the company that we’re confident we can get all those things accomplished,” he said.

Other major investors in the deal include Thomas H. Lee Partners, which has been involved in deals with Fidelity-related companies in the past, and CC Capital.

CC Capital is an investment firm founded by Chinh Chu, who partnered with Foley to start another publicly traded investment firm in 2016 called FGL Holdings.

The investment group agreed to pay $145 a share to buy Dun & Bradstreet, which said that represents a 30 percent premium to its price when it announced in February it would look at a possible buyout.

Dun & Bradstreet closed at $122.80 on Aug. 8 before the buyout agreement was announced.

Activist fund sheds Black Knight stake

After briefly holding shares in Black Knight, activist hedge fund Third Point LLC’s latest quarterly Securities and Exchange Commission filing shows it has shed its stake in the Jacksonville-based mortgage technology company.

Third Point’s first quarter filing said it had 1.25 million Black Knight shares, but its second quarter filing last week does not list any Black Knight stock.

The 1.25 million shares would be less than 1 percent of Black Knight’s stock, and Third Point never made any other filings or made any statements about Black Knight.

Third Point’s fund manager, Daniel Loeb, is a well-known activist investor. His latest public move was a call last week for Campbell Soup Co. to put itself up for sale.

GEE Group HQ is now Jacksonville

Jacksonville can now lay claim to another public company headquarters, as recent SEC filings by Gee Group Inc. list its principal office in Jacksonville.

GEE Group is a staffing company that has been headquartered outside of Chicago in Naperville, Illinois. However, Jacksonville executive Derek Dewan became its chief executive officer in 2015 after the company, then known as General Employment Enterprises, bought Jacksonville-based Scribe Solutions Inc., which was run by Dewan at the time.

Dewan, former CEO of Jacksonville-based MPS Group Inc., has continued to work out of Jacksonville and has brought in additional local executives to GEE.

Another former MPS official, George Bajalia, became president of GEE last year, and Kim Thorpe became chief financial officer in June. Thorpe was previously a chief financial officer of Jacksonville-based FPIC Insurance Group Inc.

Most of GEE Group’s headquarters operations are continuing in Naperville, but GEE Group’s top executives are all in Jacksonville, Thorpe said this week. The company’s office is listed at 7751 Belfort Parkway in its latest SEC filings.

Thorpe said no decisions have been made on moving more operations to Jacksonville, but the company could move all of the headquarters functions here.

“We are considering it,” he said.

GEE Group’s last annual report said the company had offices in 16 U.S. states.

CSX decentralizes operations

More than a year after CSX Corp. shook up its executive suite, the Jacksonville-based railroad company continues to overhaul its management structure.

CSX last week announced a realignment to decentralize operations, which it says will make the company more efficient.

The new alignment for the railroad, which operates throughout the eastern U.S., includes creation of an east and west structure with two longtime CSX executives in charge of the regional operations.

Bob Frulla was named senior vice president for the east and Jermaine Swafford was named senior vice president of the west.

“This is a proven model that pushes decision making closer to the day-to-day field operations and eliminates bureaucracy and long-standing silos within our business,” CEO James Foote said in a news release.

ADT falls again

ADT Inc.’s stock took another hit last week when the security company reported an unexpected second-quarter loss.

The stock fell $1.01 to $8.47 last Thursday after reporting a loss of $67 million, or 9 cents a share, for the quarter.

ADT went public in January for the second time in five years and the stock has been nothing but a disappointment all year.

The company had hoped to sell its shares at $17 to $19 each but had to reduce the price to $14 when the initial public offering hit the market.

The stock dropped even lower on its first day of trading, closing at $12.39, and has continued to perform poorly.

Boca Raton-based ADT is one of Jacksonville’s largest employers with more than 3,000 workers

Drone Aviation reports loss

Drone Aviation Holding Corp. reported minimal second-quarter revenue, but it was higher than the second quarter of 2017.

This year’s quarterly revenue was $42,000, up from $13,876 last year, according to its quarterly report filed with the SEC.

The Jacksonville-based company, which had $911,023 in revenue for the first half of 2018, said it expects sales to increase because of a pipeline of contracts announced for its aerostat and drone products.

Drone Aviation reported a net loss of $1.08 million, or 12 cents a share, for the second quarter.