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CNET Acquired for $1.5B; Offers 45% Premium to Keep Dissenting Investors Happy


CBS is paying a 45% premium in order to buy CNET for $1.8 billion!

Why?

Why would they offer up a 45% premium for a company that’s seen its stock slump recently? Let’s speculate shall we?

  1. CBS had money burning a hole in its pocket.
  2. CNET had more than one suitor, so enjoyed a behind the scenes bidding war.
  3. CBS wanted to offer enough of a premium to satisfy its grumbling investors.

My vote is on option 3–with maybe a little of option 1. CBS will clearly benefit from CNET’s vast footprint in online media, but I believe the premium is likely an attempt to avoid any conflict with CNET’s dissenting investors.

A group of investors led by New York hedge fund Jana Partners LLC has been agitating for a shake-up at CNet after its shares fell sharply in the past year. Jana Partners has led a proxy fight to get a slate of directors elected to the CNet board.

The investors say CNet’s management has failed to take advantage of the company’s online presence to grow revenue as quickly as the advertising market is increasing.

Had CBS offered a single digit premium for CNET’s stock, Jana et al would have likely complained it wasn’t enough, tried to fight the acquisition, and perhaps confused investors with talk of the need for alternative bids.

While Jana Partners spokesman did not have a comment “yet,” I suspect that the 45% premium is designed to ensure the only comment they make is “woohoo!” ;-)

  • http://chasinggoogle.blogspot.com Elections guy

    CNET has definitely the best software and PC users portal in the whole Internet.

    Elections guy’s last blog post..Polls before Pennsylvania primary: Obama most popular

  • http://sandossu.com sandossu

    CNET is definitely an internet authority and it might be worth the $1.8b

  • David Vogelpohl

    CNET rocks. Hopefully they won’t lose too much geek cred with their new masters.

    Of course, CBS brought us MacGyver, Hawaii Five-0, & Jericho so maybe they’re not all bad :)

  • http://pointlessbanter.net kevin

    At least they don’t have a “half” burning a hole in their pocket. :)

  • http://www.jaankanellis.com Jaan Kanellis

    Now the CBS needs to hire someone to optimize those CNet properties:

    http://www.jaankanellis.com/jana-to-cnet-you-need-more-seo/

    Jaan Kanellis’s last blog post..Can You Manage Your Email and RSS Reader?