NEW YORK The board of directors at Digital Impact recommended shareholders decline InfoUSA's unsolicited offer to buy the company for about $71 million, saying the price was too low.
InfoUSA, an Omaha, Neb.-based database company, last month offered to pay $2 in cash for the 35.3 million outstanding shares of the Internet marketing agency. At the time, the price was a 38 percent premium on Digital Impact's stock price. Since then, Digital Impact's share price has risen to $1.99.
Digital Impact's board said it concluded the company could build more value by continuing its plan to expand the San Mateo, Calif., firm beyond primarily e-mail marketing services. It bought search-marketing provider Marketleap in July 2004 for $3.8 million.
"We believe that continued execution of our business plan will enable us to deliver value to our stockholders in excess of InfoUSA's offer," Digital Impact CEO William Park said in a statement.
Credit Suisse First Boston, hired by Digital Impact to evaluate the offer, reported to the board that the offer was "inadequate" financially, Digital Impact said. In January, Digital Impact reported third-quarter revenue of $11.1 million and an $811,000 net loss.
To guard against a hostile takeover, Digital Impact said it would adopt a shareholder's rights plan. Under terms of the plan, Digital Impact shareholders gain the right to purchase one share for each share owned as of March 16, 2005. The provision kicks in if a third party gains control of 15 percent of Digital Impact's shares.
InfoUSA representatives were unavailable for comment.