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Civil War at Dun & Bradstreet/Credibility

MANHATTAN (CN) - Dun & Bradstreet Corp., the business intelligence and risk-management firm, has been sued for rejecting a buyout offer from Dun & Bradstreet Credibility Corp., which bought an underperforming D&B subsidiary in 2010.

Dun & Bradstreet Credibility Corp. ("Credibility") sued Dun & Bradstreet Inc. and The Dun & Bradstreet Corp. in a heavily redacted complaint in New York County Supreme Court.

Credibility accuses the Short Hills, N.J.-based firm of intentionally and maliciously breaching its agreements with Credibility to forestall its bid "to acquire D&B at a cash premium for D&B's shareholders."

The plaintiff company, which is based in Malibu, California, was created to purchase D&B's "North American Self Awareness Solution" business, an entity marketed as enabling companies to self-monitor and build their credit.

Credibility claims that in connection with that deal, which was consummated on July 30, 2010, the two companies entered into a commercial services agreement (CSA) granting Credibility perpetual rights to marketing and distributing credit monitoring products in exchange for quarterly royalty payments to D&B.

"Since entering into the Asset Purchase Agreement and the CSA, DBCC's business has flourished," the plaintiff says. "DBCC has invested in the growth of its business. It has hired skilled, experienced and creative senior management and other employees, growing the company to over 600 employees in 2014 located in DBCC officers currently in California, New York, Pennsylvania, North Carolina and Arizona. ... D&B has also benefited from DBCC's investment and innovation through royalties DBCC has paid and continues to pay to D&B pursuant to the CSA."

Despite the positive nature of this relationship, Credibility says, D&B's core business has faltered in recent years-a problem that Credibility blames on Dun & Bradstreet's ignoring negative customer feedback and complaints.

Courthouse News reported from Seattle in December 2012 that "'Thousands of small businesses' were 'deceived, misled and cheated' by Dun & Bradstreet in a 'pay to play' scam that sells useless credit products in exchange for a favorable credit rating, a construction company claims in a federal class action.

In March 2009, Courthouse News reported that "Dun & Bradstreet is accused of failing to detect Agape World's alleged $400 million Ponzi scheme, costing an investor $75,000." That CNS story contained a link to Agape World's alleged Ponzi scheme.

In Credibility's new lawsuit, it claims that in September 2013, Credibility participated in a purchase offer to acquire D&B, along with two of the world's largest private equity firms and an additional, unidentified strategic partner.

After that offer, "there was a seismic shift in D&B's tone and approach with respect to DBCC and D&B's obligations under the CSA," Credibility claims in its lawsuit.

"D&B gave no written response and flatly rejected the proposal, which offered a significant all-cash premium for D&B shareholders at a purchase price ranging from $115 to $125 a share. This rejection came despite the sincere and continued interest on behalf of DBCC and its equity partners. In addition, D&B appointed a new Chief Executive Officer, Robert Carrigan, who immediately made it known to DBCC that things had changed."

In fact, Credibility claims, after reviewing the 2010 deal between Credibility and D&B, Carrigan declared it "the dumbest f---ing deal I have ever seen in my career," and told D&B's board of directors he didn't want to do business with DBCC.

"Instead of responding to the offer to purchase D&B, Mr. Carrigan threatened that if DBCC did not sell back the rights to the D&B brand ... D&B was going to do everything it could to make things difficult for DBCC ..." Credibility claims in its lawsuit.

"Mr. Carrigan then incredibly and meticulously outlined some of the specific initial steps D&B threatened to take -- including clear violations of the CSA -- in an effort to harm DBCC's business and extort DBCC into giving up the very license rights upon which DBCC's business depended."

Credibility seeks an injunction, specific performance and (redacted) million of dollars in damages for breach of contract, bad faith, tortious interference and harassment.

It is represented by Jeffrey Simes with Goodwin Proctor in New York.

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