Domain of cash at Register.com

January 28th, 2003
By Ben Silvererman

CASH is king. Just ask Register.com.

In a battle that's been played out in dueling press releases, two firms recently launched takeover bids for the New York-based domain registrar.

The fight was launched on Jan. 15 by RCM Acquisition Co., an affiliate of Barington Companies Equity Partners. Its $4.95 per share offer was valued at $198 million, but Register.com quickly rejected it.

Next up was IWB Acquisitions, a wholly owned subsidiary of Zackfoot Investments. IWB offered up $5.55 per share, or about $226 million, for Register.com. The company has yet to respond.

Shares in Register.com, which closed at $4.57 the day before the first buyout offer, closed at $5.78 on Friday.

Zachary Prensky, who controls Zackfoot, is a former Register.com director; his firm helped the company raise financing before its initial public stock offering. He says he's "disappointed that the company hasn't responded" to his offer.

Phone calls to RCM parent Barington rang a constant busy signal, and an e-mail to James Mitarotonda, Barington's president and CEO, was not returned. The company did not put contact information on its press release - odd considering that most wire services, especially those that allow the issuer to list public company stock symbols, require contact information be listed.

"The value in the company lies in its core, loyal group of customers who come back each year and renew domains," says Prensky.

But the real value in Register.com is its cash position: $215.5 million in cash and cash equivalents, short-term investments and marketable securities as of Sept. 30, 2002. That was actually an increase from the end of 2001.

Taking into consideration the cash alone, Register.com is worth about $5 per share. That puts RCM's offer below the book value of the company and puts IWB's offer at a premium that may still undervalue Register.com's core business - which one source prices at about $1.20 per share.

The takeover attempts in themselves are not surprising. Sources told The Post that Register.com has been talking to suitors for almost a year but hasn't yet closed in on any deals.

"They're incredibly difficult people to deal with, and that's one of the big problems when it comes to anyone buying them out," a source familiar with the situation said.

On face, the offers for Register.com appear legitimate, although companies with such low stock prices can be great fodder for pump-and-dump schemes, in which shareholders launch a bid solely for the pop that the stock price will get on the news.

A spokesperson for Register.com said the company is reviewing both offers and would have a "clear response" to them soon.