Management to Buy Out Leapnet

Chicago-based interactive shop Leapnet is set to be bought out by a company controlled by two of its executives, through a deal proposed earlier this week.

Leapnet chairman and chief executive Robert Figliulo and his brother, vice president of sales David Figliulo, said their privately-owned company, SPRI, would purchase all of the remaining shares of Leapnet for $1.85 in cash per share.

The offer represents a 9 percent premium above the stock’s average price of $1.68 over the past ten trading days. For the offer to go through, however, the owners of 90 percent of Leapnet’s outstanding shares agree to accept the payout.

If the offer is approved by the voting shareholders, the entire transaction is expected to be completed by the end of December.

The Figliulos, who together own about 14.8 percent of the company, said they would hand over their stake to SPRI at no cost. It’s also expected that Mickelberry Communications, an owner of about 9 percent of the company’s stock, will vote its shares in favor of the transaction, or at least, won’t oppose it. Mickelberry, a marketing services company based in New York, previously held discussions with the Figliulos about the possibility of a management buyout of Leapnet, and tentatively agreed not to fight such a move.

During the next several days, SPRI said it would begin contacting other Leapnet shareholders about the cash offer.

The move, which would effectively remove Leapnet’s finances from public scrutiny, comes as the company runs dangerously low on funds, amid falling revenues. At the end of September, the firm reported only about $440,000 in the bank, and about $14 million in marketable securities. The firm also reported quarterly revenue had dropped about 60 percent from last year, to about $6.6 million, and posted a third-quarter net loss of $28.2 million, or $4.82 per share.

Leapnet, which in the past has done work for MSNBC, American Airlines and Ernst & Young, isn’t the first interactive shop to attempt to go private. Earlier this year, New York-based Agency.com went private through a buyout by Seneca Investments, a majority shareholder.

Seneca, a group spun out of ad agency holding company Omnicom, also announced similar plans for San Francisco-based Organic, in which it also holds a major stake.

The firm proposed a buyout of Organic in September, a move that is expected to be put to a vote during the company’s annual shareholder meeting in mid-December.