What is one of the best ways to make investors really want to revolt against you? You can try announcing you are in merger talks after market rumors, and then just as quickly announce that merger talks have terminated. This morning Jupitermedia (JUPM-NASDAQ) did just that. Here is what the company is saying today:
On February 22, 2007, in response to articles that had been published in the business press and subsequent trading activity in Jupitermedia Corporation’s stock, Jupitermedia issued a press release confirming that it was then in discussions with Getty Images, Inc. regarding a potential transaction with Getty Images. These discussions between Jupitermedia and Getty Images have now terminated. As stated in such press release, it continues to be the long-standing company policy of Jupitermedia not to confirm or deny market rumors.
Well, if you confirmed the rumors and then said talks have terminated, then what is your real policy? In all honesty, it was a wonder as to why Getty would have wanted to acquire Jupitermedia. There is that huge photo and content library that definitely has value, but Getty would be able to license this library far cheaper than it would have paid to just acquire the company. That diminshes the Getty-centric value since it isn’t exclusive, but the balance sheet on JUPM made this one very expensive to Getty even if it was going to be only a $300-ish million deal for a $3 Billion company.
We gave some other notes on this back on February 22, 2007. Shares are now down almost 15% at $7.35 after trading above $8.50 before the announcement. The stock is still at the lower-end of the $5.45 to $18.81 trading band over the last 52-weeks. Shares briefly traded over $10.00 upon the commencement of the "buyout" talks.
If the company hasn’t gone ahead and began piecing together its legal response to shareholder class action suits then it should start on that right now. Class action suits may take longer to be filed because of the market action over the last week, but it is probably a safe assumption that at least one class action suit is coming against Jupitermedia and its management.
Jon Ogg is a partner in 24/7 Wall St., LLC and he can be reached at [email protected]; he does not own securities in the companies he covers.
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