Coup du Jour at infoUSA

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A couple weeks ago, in a lighthearted romp through the boardroom machinations at data-collection company infoUSA (Nasdaq: IUSA), we related the story of a historic discovery: a vertebrate board of directors. This rare bird, thought to have become extinct sometime in the P.E. (Pre-Enron) era, had somehow managed to survive to modern times in the remote Nebraskan wilderness. Sadly, no sooner had we learned of its survival than the breed became extinct once more. The real tragedy: It wasn't done in by some toothy predator, but by its own hand.

In March of this year, CEO Vin Gupta stated on the record that infoUSA was worth "in excess of $18 per share." Three months later, on June 8, the company issued an earnings warning that lopped 21% off its market cap. Five days after that, Gupta presented infoUSA's board with an offer to purchase all outstanding shares that he did not already own at $11.75 per stub.

$11.75. That's a significant figure for three reasons: (1) It's about a 35% discount to what Gupta said the firm was really worth; (2) It's cheaper than the firm was trading for before the earnings warning; and (3) Gupta didn't mention either (1) or (2). Rather, he termed his offer a "25% premium" to the then-current market value, and shareholders' "best opportunity to realize a very attractive value for their shares."

Within two weeks, infoUSA's board of directors established a special committee to evaluate Gupta's offer, which it ultimately rejected. The decision may have been influenced by some Q2 earnings results that didn't look nearly as dire as the earnings warning had people expecting -- profits grew 71% year over year, for example. The special committee didn't consider that the end of the matter, of course. After all, it had been formed not just to examine the one offer on the table, but to seek out better offers from third parties as well.

Or so the committee members thought. No sooner had the special committee put the kibosh on Gupta's offer than infoUSA's board dissolved the special committee, ending its efforts to find a better price for infoUSA's shareholders.

This story may be taking place in Omaha rather than Denmark, but one thing's for sure: Something smells rotten.

Further fiduciary Foolishness:

• Management Wants to Buy American
• An Acxiomatic Bargain
• infoUSA Takes Shares, Goes Home
• Acxiom Collects Data Collector

Fool contributor Rich Smith does not own shares of infoUSA.