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Register.com Inc.’s largest shareholder is raising doubts about the domain name registration company’s $202 million acquisition by private equity firm Vector Capital Corp. In an Aug. 12 regulatory filing, James Mitarotonda, a Register.com board member and CEO of New York hedge fund Barington Cos. Equity Partners LP, said he is “inclined to vote against approval of the Vector transaction” based on an analysis of the deal. Barington and its investors own 14.9 percent of the New York-based company’s shares. Mitarotonda made his own run at Register in June, proposing to buy it for $7.10 a share, or $184 million, but the company rejected the offer. He also was involved in the most recent acquisition talks, but chose not to match or top Vector’s offer. In a statement, Register.com questioned why Mitarotonda would oppose an offer that is superior to his own bid. “We are surprised about Jim’s view given that Vector’s price was higher than any offer by the Barington group,” the company said. Mitarotonda declined additional comment. After Register.com rejected his offer to buy the company, the company in June hired Credit Suisse First Boston to explore strategic alternatives, which led to the sale to Vector. Vector on Aug. 9 agreed to pay $7.81 a share for Register.com in a deal to take the company private. At the time the offer represented only a 2 percent premium to the value of Register.com’s stock, but a 21 percent premium to the share price before Mitarotonda’s bid in early June. Alex Slusky, managing partner with San Francisco-based Vector Capital, said by e-mail that he has not spoken with Mitarotonda, but still expects him to vote in favor of the deal. “In the end, I believe he will support the transaction,” Slusky said. Mitarotonda joins Mark Cuban, owner of the National Basketball Association’s Dallas Mavericks and Register.com’s second-largest shareholder with a 13.2 percent stake, in challenging the acquisition. Cuban, who called Vector’s offer “ridiculously low” after it was announced, said last week he would vote against the deal. Both Mitarotonda and Cuban were part of a nine-member slate of candidates running for seats on Register.com’s board of directors. A meeting to select a board was scheduled for Sept. 8, but it was canceled following the Vector acquisition. In Friday’s regulatory filing, Mitarotonda said he has not determined what action he may take regarding postponement of the meeting. Register.com said a shareholder vote on the acquisition will be held in November or December. The company provides Internet domain name registration to 2.9 million customers, although it has suffered in recent years amid rising competition from other domain name services firms such as Tucows Inc. of Toronto and Network Solutions of Herndon, Va. As of June 30, Register.com had $110 million in cash. For 2004 it reported net income of $3.3 million on revenue of $100.9 million. Copyright �2005 TDD, LLC. All rights reserved.

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