Internap Corp., a data-center operator, is is being urged to sell itself to a bigger rival by sometimes- activist shareholder Russell Glass’s RDG Capital Fund Management.
Glass wants Internap to hire investment bankers to explore strategic options focusing on a sale or merger as the industry consolidates, according to a letter dated April 24. RDG says in the letter it is a significant shareholder of Internap.
RDG argues that the Atlanta-based company -- which controls 16 of its own secure databases and has under-utilized capacity and tax benefits from losses -- would appeal to buyers who could also trim costs, the letter shows.
Internap closed at $10.49 Friday in New York trading, giving the company a market value of about $577 million. The company’s enterprise value is about $916 million, according to data compiled by Bloomberg. RDG projects that Internap would be valued at $16 to $19 a share in a sale, based on valuation multiples paid for comparable companies, the letter shows.
A representative for Internap didn’t immediately respond to a request for comment.
Glass has been active in the data sector before. His New York-based hedge fund in 2011 targeted DST Systems Inc., offering to acquire the data-processing software and services company amid interest from private-equity firms. DST Systems remained public, and its shares have gained about 144 percent since Glass’s interest became public.
RDG is also currently agitating TravelCenters of America LLC, the operator of truck stops along the U.S. interstate, to sell and lease back its real estate and to separate its vehicle-repair business.
Activist investors generally acquire equity stakes in publicly traded companies and push executives and directors to make changes they believe will boost shareholder returns.