RDG Capital Recommends Internap Explore A Potential Sale Or Merger To Maximize Shareholder Value
Discloses Discussions with Leading Technology Sector M&A Investment Bankers
Estimates Private Market Value at $16 - $19 per Share
NEW YORK, April 27, 2015 /PRNewswire/ -- RDG Capital Fund Management ("RDG"), a significant shareholder of Internap Corporation ("Internap" or the "Company") (NYSE: INAP), announced today it has delivered a letter to the Company's Board of Directors (the "Board"). The letter notes that despite continuing operational improvements and recent share price appreciation, RDG believes Internap remains significantly undervalued compared to its estimated private market value of $16 - $19 per share.
To remedy the Company's undervaluation, RDG strongly recommends the Board retain a nationally recognized investment banking advisor to explore strategic alternatives to maximize shareholder value, including a potential sale or merger. Based on discussions with leading technology sector M&A investment bankers, RDG believes there are likely a number of potential strategic buyers who would be interested in acquiring Internap at a significant premium to its recent trading valuation.
Whereas comparable data center companies trade at an average 6.4x 2015E revenue and 14.3x 2015E EBITDA, RDG notes that Internap trades at just 2.6x 2015E revenue and 9.9x 2015E EBITDA, representing the lowest valuation multiples in its peer group, notwithstanding the Company having a projected EBITDA growth rate similar to its peers.
Furthermore, RDG notes that recently announced data center industry M&A transactions such as Zayo Group's acquisition of Latisys Corporation at 15.3x LTM EBITDA and Telecity Group's acquisition of Interxion Holding NV at 16.4x LTM EBITDA reflect a highly favorable M&A market environment in which data center acquirers are willing to pay attractive valuation multiples.
As a leading operator of company-controlled data centers providing hybrid services to high performance-dependent customers, RDG believes Internap would be attractive to many potential strategic acquirers looking to extend their service offerings, expand their geographic coverage, and improve their operational efficiency through consolidation. RDG has identified in its letter numerous potential acquirers that it believes could realize significant one-time accelerated capacity utilization benefits of $100 million and substantial cost savings and cross-selling synergies in excess of $60 million annually.
Based on data center industry M&A valuation multiples and discussions it has held with leading technology sector M&A investment bankers, RDG estimates the private market value of Internap in a merger or sale would be $16 – $19 per share.
The full text of the letter can be found here.
About RDG Capital Fund Management
New York-based RDG Capital Fund Management ("RDG") is a private investment firm founded by Russell Glass, the former President of Icahn Associates. RDG manages investment funds which primarily focus on undervalued companies with identifiable catalyst opportunities to enhance shareholder value.
Important Disclosures
Any views expressed herein represent the opinions of RDG, whose analysis is based solely on publicly available information. No representation or warranty, express or implied, is made with respect to the accuracy, timeliness or completeness of the information contained herein. RDG expressly disclaims any and all liability based, in whole or in part, on such information, any errors therein or omissions therefrom. Any opinions expressed herein are subject to change without notification. Forward looking statements involve certain risks and uncertainties and assumptions. Actual results may differ materially from those contained in forward looking statements. RDG does not assume any obligation to update, correct or revise the information contained herein. RDG intends to review its managed funds' investment in the Company on a continuing basis and may from time to time and at any time in the future depending on various factors, including, without limitation, the outcome of any discussions referenced above, the Company's financial position and strategic direction, actions taken by the Board, price levels of the Company's shares, other investment opportunities available to RDG, conditions in the securities market and general economic and industry conditions, take such actions with respect to its managed funds' investment in the Company as it deems appropriate, including, without limitation: (i) acquiring additional shares and/or other equity, debt, notes, other securities, or derivative or other instruments that are based upon or relate to the value of the shares or the Company in the open market or otherwise; (ii) disposing of any or all of such securities or instruments in the open market or otherwise; or (iii) engaging in any hedging or similar transactions with respect to such securities or instruments.
Figures may represent estimates of RDG or third parties and may not be indicative of future results. There is no assurance or guarantee with respect to the prices at which any securities of the Company will trade, and such securities may not trade at prices that may be implied or stated herein. The estimates and pro forma information set forth herein are based on assumptions that RDG believes to be reasonable, but there can be no assurance or guarantee that actual results will not differ materially. The information contained herein does not recommend the purchase or sale of any security nor is it an offer to sell or a solicitation of an offer to buy any security. Furthermore, the information contained herein is not intended to be, nor should it be construed or used as, investment, tax or legal advice. No representation or warranty is made that RDG's investment process or investment objectives will or are likely to be achieved or successful or that RDG's managed funds' investments will make any profit or will not sustain losses. Past performance is not indicative of future results. Nothing contained herein should be taken as any form of commitment on the part of RDG to take any action in connection with any particular security. RDG and its affiliates are in the business of buying and selling securities. They have, and may in the future, buy, sell or change the form of their position in the Company or any security for any or no reason whatsoever. RDG has neither sought nor obtained the consent from any third party to use any statements or information contained herein that have been obtained or derived from statements made or published by such third parties which RDG may not be able to independently verify. Any such statements or information should not be viewed as indicating the support of such third parties for the views expressed herein. Furthermore, RDG makes no representations or warranties as to the accuracy, timeliness or completeness of such information.
CONTACT: Ryan Schoenig
RDG Capital Fund Management LP
(212) 407-2199
[email protected]
SOURCE RDG Capital Fund Management
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