Companies trying to bury awkward news they don't want widely circulated often stick it at the bottom of a press release or deep inside a regulatory filing. So, for example, we found the following paragraph at the very end of Gannett's announcement yesterday that it had bought social-network software maker Ripple6:
"As part of the transaction, the 10 percent share of Ripple6 owned by Chris Saridakis, senior vice president and chief digital officer of Gannett, was bought out completely by Gannett. He did not participate in the sale negotiations."
Smart Gannett Blog readers noticed that curious passage, and wondered, understandably, why GCI is doing big business with one of its own officers. Worse still, the announcement says: "Terms were not disclosed." That's a fancy-schmancy way of saying Gannett would not reveal the price paid for Ripple6 -- or the method of payment. (Gannett stock? Unlikely. Cash? Probably.)
One unhappy reader summed it up last night in a comment: "A horrible economy. A stock that dives from $90 to $8.50. In the middle of it all, an acquisition that benefits -- more than GCI stakeholders -- one of its new division heads."
Saridakis beats odds -- twice!
Gannett will use Ripple6 to create and power online communities, including its most successful ones to date: the recently rebranded MomsLikeMe.com sites.
Now, there are thousands of software companies in the world to buy. What are the odds GCI would choose one co-owned by one of its highest-ranking officers? Better yet, what are the odds Gannett would make that kind of deal twice? Quite good, it turns out.
Just eight months ago, GCI paid $4.6 million to Saridakis (left), for the remaining shares he owned in PointRoll -- the advertising services company Gannett bought in 2005. Saridakis, 40, was its CEO at the time, and so a significant stockholder.
That $4.6 million payment raised eyebrows, when it was disclosed last spring in a shareholders proxy report filing with the U.S. Securities and Exchange Commission. Moreover, the payment was disclosed way back on page 50, where many investors might not have seen it. By then, of course, Saridakis had pole-vaulted onto the powerful Gannett Management Committee, chaired by CEO Craig Dubow. Saridakis was the young technologist, suddenly in line to succeed Dubow.
Document reveals $2.2 million contract
The same proxy report also says: "In March 2008, we entered into contracts with Ripple6, Inc., an entity in which Mr. Saridakis holds a 10% interest, pursuant to which Ripple6 will provide approximately $2.2 million of computer programming services related to strategic plan initiatives. As our senior management was aware of his indirect interest, Mr. Saridakis did not participate in the negotiation of these contracts. Due to the immaterial amounts involved, the contracts were approved by senior management."
That $2.2 million is the gross amount, of course; I'd like to know how much of it was profit split among Saridakis and his partners -- and how big a cut Saridakis got.
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