Gurbaksh Chahal, the founder and former CEO and director of RadiumOne, wants its new management to sell the company rather than aim for an IPO — and he’s making efforts to do so himself.
“As I’ve informed you previously, I have been in discussions with investment bankers seeking to facilitate a transaction, and have offered my assistance to the company,” wrote Chahal, in a letter obtained by Re/code that the longtime entrepreneur just sent to the board. He then noted that there was at least one interested party, although that company is not named and no price is mentioned.
But sources close to the situation said the price that Chahal was bandying about for the real-time bidding advertising company was just over $400 million.
Whether RadiumOne can get that number or do better with an initial public offering is unclear, but it is a certainly an interesting effort from Chahal, given his recent history at RadiumOne.
As most know, he was fired by the board in a move related to his conviction in San Francisco to two misdemeanors for battery and domestic violence. Chahal has since said he was not guilty and has asserted he was wrongfully terminated by the RadiumOne board, which had previously supported him.
But he seems to have settled his differences with the board — which were quite tense at one point. Now, based on the letter, he seems intent on trying to get them to act by urging directors to take advantage of the market now and before options dry up.
Chahal is the largest shareholder of RadiumOne, owning one-third of its shares. The company has raised $33.5 million in funding, including from him. He’s also had a big score in selling startups before — his BlueLithium was purchased by Yahoo in 2007 for $300 million.
Wrote Chahal (the full letter is embedded below):
Since my last letters, market conditions in the ad-tech sector have continued to demonstrate that it is cyclical. There was originally an IPO phase of the market; that phase is now over, as demonstrated by the failed IPOs of Rubicon, Tube Mogul, and the lackluster performance of YuMe, Millennial Media, etc., as well as the collapse of the market cap for companies such as Rocket Fuel, Inc.
The market has since transitioned from the IPO phase to a strategic phase, where larger entities have been making acquisition plays. For example, LinkedIn purchased Bizo for $175 million, Rocket Fuel purchased X+1 for $230 million, Oracle purchased BlueKai for $400 million and Acxiom purchased LiveRamp for $310 million.
Just yesterday, it was announced that Conversant (formerly known as ValueClick) was acquired by Alliance Data for $2.3 billion in cash and stock, and will be folded into Alliance’s marketing services division Epsilon.
There remain players actively seeking acquisition targets, but the window continues to narrow as more and more deals such as Conversant occur. RadiumOne needs to be be at the table when potential acquirers are searching for strategic partners. If RadiumOne doesn’t make these moves to ensure it is involved in that process, I firmly believe the musical chairs for this M&A round will be over.
He’s making an interesting point, for sure, but new CEO Bill Lonergan declined to comment about the effort. “This is a rumor and I do not comment on rumors,” he wrote to me in a text.
Well, not a rumor exactly — here is the Chahal letter in full:
This article originally appeared on Recode.net.