InfoUSA rejects IIT alumnus Gupta's buyout offer
InfoUSA is having trouble keeping its head above water as its stock fell after news that it has rejected Gupta's buyout offer.india Updated: Aug 30, 2005 14:06 IST
The publicly traded database management company InfoUSA, founded by Indian American Vinod Gupta, is having trouble keeping its head above water as its stock fell after news that the company has rejected Gupta's buyout offer.
Gupta, who founded the company in 1972 with just $100 in his pocket, owned 37 per cent of the shares of the struggling company. When he offered to buy it in June, the company appointed a special committee to oversee the bid.
But the company said Aug 26 its board had dissolved the committee that was set up to review the previously announced proposal from Vin Gupta and Co to acquire all of the outstanding publicly held common shares of InfoUSA not held by Gupta.
On Aug 24, the special committee had informed Gupta - an alumnus of the Indian Institute of Technology (IIT) at Kharagpur in West Bengal - that it did not intend to move forward with his proposal. He then withdrew his proposal.
Now the company's stocks - that rose to more than $11 dollars a share in June after Gupta made the offer to purchase the rest of the stock at $11.75 - have dipped to $9.89, sending alarm bells ringing with other company investors.
"I thought that if companies had the right information in front of them, they could market and sell the right products to the right people at the right time," said Gupta about his idea for the company.
Today, the $100 investment has transformed into a $300 million public company with more than 1,550 employees nationwide, but it is facing a tough battle.
Gupta claims his company was changing the face of the information industry with among the most comprehensive databases of 14 million businesses and 250 million consumers nationwide.
These databases capture detailed information on majority of businesses and consumer households in the US and Canada.
They are compiled under one roof in Papillion, Nebraska, employing hundreds of people to input data from thousands of public sources such as yellow pages, white pages, newspapers, incorporation records and real estate deed transfers.
Some investors such as James Awad of Awad Asset Management that owns 5.3 percent of the stocks in InfoUSA told Dow Jones that things did not feel right and that the issue had to be investigated further.
Gupta was in news recently when he announced a $1 million endowment to set up the Rajiv Gandhi School of Intellectual Property Law at IIT, Kharagpur, through his charitable foundation.