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‘Activist’ fund backs $1.7bn buyout

San Francisco-based hedge fund ValueAct, led by a former BLUM partner, has agreed to enter its second private equity deal with the purchase of publicly traded Catalina Marketing Corporation.

San Francisco-based hedge fund ValueAct Capital has agreed to buy St. Petersburg, Florida-based Catalina Marketing Corporation for about $1.7 billion (€1.3 billion) in cash. That value includes the assumption of $135 million in debt.

The deal is expected to close “in the next several months,” Catalina said in a statement.

Shareholders will receive $32.10 per share in cash, which is a premium of about 32 percent over the closing price on December 7, 2006.

ValueAct has been an investor in Catalina since 2003, Jeffrey Ubben said in a statement. Ubben is the co-founder, managing director and principal owner of ValueAct, and he has been Catalina’s director since last May.

Catalina is a provider of mass market, behavior-based communications. The company focuses on consumer behavior and develops in-store marketing materials, including incentives, loyalty programs and sampling. It also develops interactive websites.

Ubben co-founded ValueAct in 2000. Prior to that, he was a managing partner at BLUM Capital Partners, a San Francisco-based firm that invests in public and private companies, according to a biography on Catalina’s website. He previously worked as a research analyst at Fidelity Management and Research, a division of life insurance provider Pacific Life. He was formerly the chairman and director of Martha Steward Living Omnimedia.

ValueAct has been involved in private equity deals in the past. It joined private equity firms Kelso and Company, GS Capital Partners and Parthenon Capital to take private ADESA, a wholesale vehicle auctions and used vehicle dealer financing company, in January. That deal was worth about $1.4 billion.

ValueAct bought MSD Ignition, a developer of high-performance automotive ignition systems for motorsports like NASCAR, from Gryphon Investors for $141 million in April of 2005. The company’s management also took part in that deal.