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IP: SAIC's acquisition of NSI - details
From: Dave Farber <dave () farber net>
Date: Sat, 06 Jul 2002 08:04:23 -0400
------ Forwarded Message From: John Gilmore <gnu () toad com> Date: Fri, 05 Jul 2002 22:40:05 -0700 To: Joe McGuckin <joe () monk via net>, gnu () new toad com Cc: nanlev () well com, farber () cis upenn edu Subject: Re: SAIC's acquisition of NSI - details A Salon article reader asked:
... you mentioned the 'original owner of network solutions'. Who was this?
Emmit J. McHenry was the founder of Network Solutions, and its CEO at the time SAIC acquired it. He now has various other businesses; you can find him with Google. See the Network Solutions "Form S-1/A" of August 27th, 1997, which you can find at: http://edgar.sec.gov/Archives/edgar/data/1030341/0000950133-97-003115.txt Reading these things is an art, but the NSI one is particularly blatant about stating the ugly facts, relying on the investor not to read them before throwing their money at NSI. Appended to this message, for example, is an excerpt from the above filing, that gives a good idea of how much was paid by SAIC to buy Network Solutions on March 10, 1995: about $4.5 million in SAIC stock. Whose pockets that stock ended up in is not immediately visible here, though digging in other documents may discover it. Another part of this document reveals that Mr. McHenry was also paid about $850,000 cash, in return for a "non-compete agreement" and other things. This prospectus for NSI going public, raising about $30 million, says that $10 million of that will immediately be paid out as a dividend to SAIC. This dividend had already been "declared" by the NSI board, but was to be paid after the public offering. This dividend took a profitable company and made it lose money. Also note that it paid back SAIC, days after the IPO, more than double the cost of the initial acquisition of NSI -- and that despite doubling their cash, SAIC still owned 84.5% of Network Solutions, while the IPO investors would own 15.5%. SAIC's stock had 10x the voting power of everyone else's stock, though, so SAIC would still have 97.9% of the voting control of the company. John Gilmore http://edgar.sec.gov/Archives/edgar/data/1030341/0000950133-97-003115.txt ... The following table summarizes, on a pro forma basis, as of June 30, 1997, the differences between the existing stockholder and purchasers of shares in this offering with respect to the number of shares of Common Stock purchased from the Company, the total consideration paid and the average consideration per share paid: <TABLE> <CAPTION> SHARES PURCHASED TOTAL CONSIDERATION --------------------- ---------------------- AVERAGE PRICE NUMBER PERCENT AMOUNT PERCENT PER SHARE ---------- ------- ----------- ------- ------------- <S> <C> <C> <C> <C> <C> Existing stockholder......... 12,500,000 84.5% $ 4,480,000 11.5% $ 0.36 New investors................ 2,300,000 15.5% 34,500,000 88.5% $ 15.00 ---------- ------- ----------- ------- -------- Total................... 14,800,000 100.0% $38,980,000 100.0% ========= ======= ========== ======= </TABLE> The foregoing table is based on the total consideration paid by SAIC for its shares based on the price of the shares of SAIC Class A Common Stock (as determined by the Board of Directors of SAIC in accordance with established procedures) used to acquire the entire Company, including the government-based business which was later transferred to SAIC, and does not give effect to the $10,000,000 dividend payable to SAIC. ... 25 <PAGE> 28 ------ End of Forwarded Message For archives see: http://www.interesting-people.org/archives/interesting-people/
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- IP: SAIC's acquisition of NSI - details Dave Farber (Jul 06)