Private equity firms wanted to buy MapInfo Corp. as far back as the fall of 2005, leading to a frenzy of interest that ended with Pitney Bowes Inc.'s offer to buy the local software company last week for $408 million.
   
Details of the fast-paced negotiations, revealed this week in Securities and Exchange Commission filings, show that MapInfo's investment bankers contacted more than 30 potential buyers in December at the behest of a special committee made up of independent members of its board.

That small committee was created in October to look into the possible sale of the North Greenbush-based company, which sells mapping software and data used by businesses and government.

Management, including Chief Executive Officer Mark Cattini and others, held direct talks with a dozen companies and private equity firms, leading up to an "auction" of MapInfo, where bids were submitted to MapInfo's investment bank, Jefferies Broadview of New York City. That process began in February, and Pitney Bowes eventually won with a high bid of $20.25 per share.

But Pitney Bowes didn't originally want to pay that much, the documents show. At the time when initial bids were received, Pitney Bowes proposed offering MapInfo shareholders between $16.50 and $18 a share; at the time Pitney Bowes was facing stiff competition from seven other firms.

Some of the private equity firms were also demanding that MapInfo slash as much as $13 million in expenses immediately following a purchase, and most said they would have to land financing -- factors that likely led MapInfo management to focus on Pitney Bowes, which has nearly $6 billion in annual revenue and likely won't demand wholesale job cuts.

Negotiations began to really heat up between MapInfo and Pitney Bowes in mid-February. Executives from the two companies, along with their investment bankers, got together at the Comfort Inn & Suites in East Greenbush on Feb. 15 to conduct due diligence on the merger. That same day, Cattini met with Leslie Abi-Karam, president of the document messaging technologies division at Pitney Bowes, who was leading the merger talks for the Stamford, Conn.-based company and will be Cattini's new boss.

After several more weeks of meetings and negotiations among MapInfo and potential investors -- including two private equity firms that submitted a joint bid for $20 per share -- Pitney Bowes offered $20.25 per share on the morning of March 9. That turned out to be the offer that MapInfo couldn't refuse: a 53 percent premium to MapInfo's closing stock price on March 14, the day before the merger.

Matthew Troy, an analyst with Citigroup, said in a March 19 research note that "while not inexpensive, the price seems fair." He did note, though, that Pitney Bowes has a "historic aversion to competitive bid situations."

Said Carol Wallace, a spokeswoman for Pitney Bowes, "the auction was a competitive process, and we feel came to a fair price."
 
Between March 9 and March 14, attorneys representing both companies hammered out merger documents and contracts that would keep MapInfo's top executives with the company after the deal closes -- which could happen as early as next month. The final documents were signed March 14 in Boston, and the deal was announced the next day.

Pitney Bowes will have to pay out $3.6 million in lump-sum payments to satisfy so-called "change in control" provisions that top executives such as Cattini and others negotiated with MapInfo long before the merger was announced. Such provisions are commonplace for executives at public companies.

Although both sides say they are confident the deal will close, MapInfo has an out if it gets a better offer: paying Pitney Bowes $14.2 million to scuttle the merger. But MapInfo said in SEC documents the fee "would not be likely to preclude another party from making a superior proposal."

Jefferies Broadview stands to make as much as $5.6 million in fees from the deal based on the value of the transaction, SEC documents show.

The documents also provide a glimpse into how much MapInfo expects to grow in the coming years. The company, founded in 1986, reported a profit of $9.6 million in fiscal 2006, which ended in September, but told Pitney Bowes it projects profits could soar to nearly $40 million by 2011 -- a number the company has never publicly revealed before.

Although Pitney Bowes expects to find between $10 million and $15 million in cost savings between the two companies over the next 18 months, such an increase in profit would likely mean good things for what will be known as Pitney Bowes MapInfo when the deal is completed.

MapInfo has 940 employees, including 318 at its headquarters at the Rensselaer Technology Park.

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