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MavKikiNYC · 08-21-2005, 09:15 AM

Mark Cuban Is Mad (Again). But Why?

By ANDREW ROSS SORKIN
Published: August 21, 2005

MARK CUBAN, the entrepreneur and owner of the Dallas Mavericks basketball team, has a reputation for screaming like a deranged fan from the sidelines during games. He has been fined more than $1 million by the National Basketball Association for his antics since he bought the team five years ago.

Now, Mr. Cuban, who became a billionaire by selling Broadcasting.com to Yahoo in 1999, has focused his infamous bark on a corporate boardroom. The target of his anger is the board of a small Internet company called Register.com, which sells domain names (for example, yourcompany.com) to people and small businesses. He may deserve the Wall Street equivalent of a technical foul for his latest outburst.

Mr. Cuban became upset last week when a private equity firm, Vector Capital, bought Register.com for $202 million. He is the second-largest shareholder of Register.com, with 13.2 percent, and he apparently expected it to sell for much more.

Calling the sale "disastrous to the interests of the stockholders," he said the "price does not come close to fairly valuing the business of this company" and added that he planned to vote his shares against the deal.

A bevy of hedge fund managers who followed Mr. Cuban's lead into Register.com - licking their lips as they bought shares in it - have been running around Wall Street howling about the sale, too, as if they were channeling Mr. Cuban. Like him, they are incensed that the company did not sell for more. Some have not-so-subtly suggested that the auction was rigged.

Mr. Cuban was even blunter: "I do not see how this transaction could benefit anyone other than the current management, who must be expecting to feather their own nests."

An equally vocal critic of Register management is one of its directors, James A. Mitarotonda, the chairman and chief executive of the Barington Capital Group. He is also complaining that Register.com didn't fetch a high enough price, even though Vector's offer exceeds what Barington offered when it put Register.com in play by making an unsolicited bid for it in June.

Mr. Mitarotonda has also said that he planned to vote against the deal with Vector. He has also mounted a proxy contest to oust his fellow board members and replace them with a slate that would include Mr. Cuban.

To be fair to Register.com's critics, the company does have a lot of problems. But perhaps the biggest problem is that it hasn't been able to fix any of them. Indeed, the company has had three chief executives in the last three years.

In the end, what neither Mr. Cuban nor Mr. Mitarotonda wants to really let on is that virtually nobody - including them - wanted to pay what they want for this little company.

Yahoo and Google passed on the auction entirely. Mr. Cuban was invited to participate, but declined. Barington, which has consistently called Register.com undervalued, bid in the auction but came up short. (Its final offer was worth $7.70 a share, people involved in the auction said. When it was offered a chance to top Vector's bid of $7.81 a share, Barington balked.)

At least one offer beat Vector's by a few pennies a share, but the bidder had not yet lined up financing and sought the right to cut its bid without penalty. Register's board passed.

So if Mr. Cuban thinks the company is undervalued, why didn't he buy it himself? In an e-mail message, he said: "I'm not in a position to run the company. My goal was to work with the new board that would have been voted in during the next shareholder meeting in a couple of weeks to help the company."

Did Mr. Cuban want to help the company or help himself? After Register.com was put up for sale in June, he essentially doubled down his bet on the company, buying more than a million shares at $7.70 and hoping for a big takeover premium.

Now that it appears the premium will not materialize, his outrage - and that of his indignant followers - makes them all seem more like sore losers than corporate reformers.

08-21-2005, 09:15 AM	#1
MavKikiNYC Diamond Member Join Date: Feb 2002 Posts: 8,509	Mark Cuban Is Mad (Again). But Why? Mark Cuban Is Mad (Again). But Why? By ANDREW ROSS SORKIN Published: August 21, 2005 MARK CUBAN, the entrepreneur and owner of the Dallas Mavericks basketball team, has a reputation for screaming like a deranged fan from the sidelines during games. He has been fined more than $1 million by the National Basketball Association for his antics since he bought the team five years ago. Now, Mr. Cuban, who became a billionaire by selling Broadcasting.com to Yahoo in 1999, has focused his infamous bark on a corporate boardroom. The target of his anger is the board of a small Internet company called Register.com, which sells domain names (for example, yourcompany.com) to people and small businesses. He may deserve the Wall Street equivalent of a technical foul for his latest outburst. Mr. Cuban became upset last week when a private equity firm, Vector Capital, bought Register.com for $202 million. He is the second-largest shareholder of Register.com, with 13.2 percent, and he apparently expected it to sell for much more. Calling the sale "disastrous to the interests of the stockholders," he said the "price does not come close to fairly valuing the business of this company" and added that he planned to vote his shares against the deal. A bevy of hedge fund managers who followed Mr. Cuban's lead into Register.com - licking their lips as they bought shares in it - have been running around Wall Street howling about the sale, too, as if they were channeling Mr. Cuban. Like him, they are incensed that the company did not sell for more. Some have not-so-subtly suggested that the auction was rigged. Mr. Cuban was even blunter: "I do not see how this transaction could benefit anyone other than the current management, who must be expecting to feather their own nests." An equally vocal critic of Register management is one of its directors, James A. Mitarotonda, the chairman and chief executive of the Barington Capital Group. He is also complaining that Register.com didn't fetch a high enough price, even though Vector's offer exceeds what Barington offered when it put Register.com in play by making an unsolicited bid for it in June. Mr. Mitarotonda has also said that he planned to vote against the deal with Vector. He has also mounted a proxy contest to oust his fellow board members and replace them with a slate that would include Mr. Cuban. To be fair to Register.com's critics, the company does have a lot of problems. But perhaps the biggest problem is that it hasn't been able to fix any of them. Indeed, the company has had three chief executives in the last three years. In the end, what neither Mr. Cuban nor Mr. Mitarotonda wants to really let on is that virtually nobody - including them - wanted to pay what they want for this little company. Yahoo and Google passed on the auction entirely. Mr. Cuban was invited to participate, but declined. Barington, which has consistently called Register.com undervalued, bid in the auction but came up short. (Its final offer was worth $7.70 a share, people involved in the auction said. When it was offered a chance to top Vector's bid of $7.81 a share, Barington balked.) At least one offer beat Vector's by a few pennies a share, but the bidder had not yet lined up financing and sought the right to cut its bid without penalty. Register's board passed. So if Mr. Cuban thinks the company is undervalued, why didn't he buy it himself? In an e-mail message, he said: "I'm not in a position to run the company. My goal was to work with the new board that would have been voted in during the next shareholder meeting in a couple of weeks to help the company." Did Mr. Cuban want to help the company or help himself? After Register.com was put up for sale in June, he essentially doubled down his bet on the company, buying more than a million shares at $7.70 and hoping for a big takeover premium. Now that it appears the premium will not materialize, his outrage - and that of his indignant followers - makes them all seem more like sore losers than corporate reformers.