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Inforte Corporation: Why Being Acquired is the Right Decision

May 15, 2007 5:54 AM ETInforte Corp. (INFT)
Terence Channon profile picture
Terence Channon

On the day Inforte Corp. (OTCQB:INFT), an e-business, SAP, and analytics consulting firm, was to announce financial results the first quarter of 2007, it was also announced that Business & Decision Group will buy them for $4.25/share in cash.

I have long seem some form of an acquisition or going private transaction with Inforte Although they are relatively small with a little over $40M in annual revenues, they have been cash flow positive for the longest time, have no debt, and per their most recent filing, had $2.55/share of cash in the bank. Inforte recently traded as low as $3.11 and closed at $3.20 on Friday, May 11, 2007.

To me, it was always a no-brainer that some form of terminal event like this would happen, but I am disappointed in the offering price of $4.25/share. While at one point, I estimated a fair take over-range to be $4.50-$6.50, I thought something closer to $5.50 would be in the mix.

I do believe this is somewhat of an act of desperation by management and likely a move in the best interest of the shareholders. We saw INFT close down Provansis in December 2006, a company they invested in and watched go to zero. Recently, an 8-K was filed regarding the termination of a person's employment and the subsequent payout of $1M+ and 66,000+ shares of stock. This originated from INFT acquiring an analytics business and the resulting deal via an earn out that should have happened. For whatever reason, it did not end well. "

INFT runs a solid business, but they have not been able to yield significant shareholder value. Long term, this one has been a big loser - going public and trading as high as $80 per share back in early 2001. Of course, they were also somewhat victimized by the bad timing of the

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Terence Channon profile picture
Honest (and sometimes too analytical and verbose) insights from a guy that has done pretty well investing and managing money – but only after getting annihilated along the way several times.

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