News
ESW Capital LLC has bested Sito Mobile Ltd. in a takeover battle for mobile advertising company Hipcricket Inc. (HIPPQ).
Judge Laurie Silverstein approved Hipcricket's agreement with ESW, which offered $2.67 million more for the company than Sito, a Hipcricket rival in the business of helping companies deliver ads to mobile devices.
At a court hearing Tuesday, she rejected Sito's argument that it was unfair to allow ESW to bid at a bankruptcy auction for Hipcricket .
The ESW offer translates into a recovery of 16% to 26% of what unsecured creditors are owed, which is an improvement over what they would have received had Sito's takeover proposal prevailed, Judge Silverstein estimated at the hearing in the U.S. Bankruptcy Court in Wilmington, Del.
Hipcricket ran into trouble when it tried to compete against larger, better-funded rivals, and filed for Chapter 11 protection in January.
The company arrived in bankruptcy with an offer from Sito to pay $4.5 million in cash to buy it. Sito was approved to lead the bidding at an auction, but refused to bid after ESW was permitted to make an offer. Hipcricket initially spurned ESW, due to concerns about the form of its bid. The company later changed its mind, but Sito continued to contend ESW was not qualified to participate in the auction.
ESW's proposal takes the form of sponsorship of a Chapter 11 exit plan for Hipcricket , in contrast to Sito's acquisition proposal.
Creditors and Hipcricket supported the deal with ESW, after the investment firm addressed their concerns by preparing a draft reorganization proposal and offering funding to make sure Hipcricket makes it out of bankruptcy.
Hipcricket's Chapter 11 plan must still be voted upon and approved by the court.
