Warburg Pincus Takes Cobalt Private

Liquidation or venture capital infusions aren’t the only options for struggling Internet-related companies these days. Last week, publicly traded Cobalt Group announced it was returning to its private roots via a buyout from financial backer Warburg Pincus.

Cobalt Group (NNM:CBLT), an Internet marketing and data aggregation provider, went public in August of 1999 in an IPO lead managed by Robertson Stephens. The Seattle-based company announced it will return to private ownership through a $35 million deal reached with Warburg and an assortment of other institutional backers and related executives.

Per the agreement, shareholders will receive $3.50 per Cobalt share, a premium of 3.5% based on its $3.38 closing price at market close last Thursday. The acquisition is designed to close in September, when shareholders are expected to meet and approve the deal. Shares held by Warburg Pincus will not be converted in the merger. The firm currently owns 46% of Cobalt’s outstanding common stock.

In a written statement, Cobalt said Warburg Pincus will not consider selling its shareholdings and that the investment firm would vote against any competing proposal to acquire Cobalt. Cobalt CEO John W.P. Holt holds approximately 3% of his company’s common stock, and has already indicated that he will support the buyout.