News America Paid $29.5M in Mysterious Floorgraphics Acquisition
News America Marketing, the supermarket advertising giant, has sued the principals of Floorgraphics Inc. claiming that a number of contracts it bought in its mysterious March acquisition of FGI don't exist. (FGI invented the ads that now appear on the floors of many supermarket aisles.)
NAM's suit also reveals how much it paid to get FGI: $29.5 million. The acquisition settled a lawsuit in which FGI accused NAM of hacking into its computers to steal information. It also stopped a federal court trial after a jury had heard from three witnesses, including a disgruntled former NAM executive who had taken a laptop with him after he left the company in the belief that the SEC or the N.Y. state attorney general would be interested in its contents.When the March 10, 2009, buy occurred, the big unanswered question was, How much did NAM pay? NAM's suit gives this breakdown:
- Total paid: $29,500,000.
- Seller Contracts taken on by NAM: $13,000,000.
- FGI executives received the following for those contracts: Yves Anidjar, $1,200,000; Mike Devlin, $1,200,000; Richard Rebh, $4,800,000; George Rebh, $4,800,000,
- Total preliminary allocation: $12,000,000.
... it knew that some of the Seller Contracts could not be assigned to NAM and, in the case of certain other Seller Contracts and/or stores associated with such contracts, those contracts or stores simply did not exist, but Floorgraphics did not reveal those facts to NAM.The suit has a certain chutzpah to it. A source tells BNET that FGI had sales of less than $1 million. Many outside observers believed that at the time of the deal, FGI existed mostly to resolve its litigation against NAM, not as a functioning business. It's hard to believe NAM thought it was buying a genuine business and not settling a lawsuit, which is essentially what NAM is arguing in its suit.
The source notes that NAM's total legal costs in the deal are not mentioned in the complaint. So we can assume that the ultimate bill was a lot more than $29.5 million.
- Related:
- News America's Carlucci Again Accused of Threatening to "Destroy" Floorgraphics
- UPDATED: News America Marketing's Acquisition of Floorgraphics Not Big Enough to Show Up in Q1 Numbers
- Was N.Y. Post's Carlucci the Reason for News America Marketing's Settlement With Floorgraphics?
- Valassis, Insignia Stock Jumps on News America Marketing Group Settlement
- News America Marketing Group Buys Floorgraphics Just Hours After Settling Spying Lawsuit
- News America Marketing Group Settles With Floorgraphics; Valassis, Insignia Likely Rejoicing
- Trial: Did News America Marketing Group Break Into Floorgraphics' Computers?