Usually when stockholders get a proxy statement in the mail, it means management of the company they have invested in wants their vote on something -- approval of a merger, perhaps, or electing board members at the next shareholders meeting.
But the 95-page proxy package delivered recently to investors in DigitalNet Holdings Inc. of Herndon bluntly told them their input was not needed.
_____Previous Columns_____
•
I.C. Isaacs Fashions Its Way To Chart's Top (The Washington Post, Oct 11, 2004)
•
Fannie Mae Stock Ratings Warrant Their Own Analysis (The Washington Post, Oct 4, 2004)
•
Insider Traders Who Push Too Far Can Pay Dearly (The Washington Post, Sep 27, 2004)
•
US Airways' Woes Reflect Industry In a Tailspin (The Washington Post, Sep 20, 2004)
•
Real Value In a Mall Sale Is in the Property (The Washington Post, Sep 6, 2004)
•
More Washington Investing Columns
|
| |
|
"We are not asking you for a proxy and you are requested not to send us a proxy," the document proclaimed.
DigitalNet is being sold, the company told its shareholders, but they have no say in the matter. Insiders control 59 percent of the stock. It only takes a majority vote to sell the company, and the insiders have decided to sell.
Buying companies, bulking them up, taking them public and then flipping them to new owners is a standard strategy for GTCR Golder Rauner LLC, the Chicago investment firm that put up the cash to create DigitalNet.
Only one year after DigitalNet went public and barely three years after the company was formed, DigitalNet is being sold for a handsome profit. Scheduled to be completed in the next few months, the sale of DigitalNet to BAE Systems North America is a case study in how lucrative Washington investing can be.
Public shareholders cannot complain too much because they are all going to make money, but DigitalNet executives and their financial backers are the big winners. Another big winner: Richard N. Perle, a DigitalNet director and former assistant secretary of defense in the Reagan administration. The merger negotiations began when Mark H. Ronald, president and chief executive of BAE Systems, met with Perle in April 2004.
Perle will get a $2.5 million fee for his role in the merger, according to the notices sent to shareholders. The documents show that paying Perle generated controversy among DigitalNet board members. In the end it was agreed that his finder's fee would be paid not by DigitalNet or BAE but by the "principal shareholders," who are GTCR and chief executive Ken S. Bajaj.
The $595 million sale price is more than twice what it paid for Getronics Government Solutions, the company around which DigitalNet was built.
The buyout price is $30.25 a share, which means a 78 percent profit for investors who bought the stock at $17 a share when DigitalNet went public in fall 2003.
