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The attached material represents material available on the Internet at
www.savemercator.com beginning on April 1, 2003.
SAVE MERCATOR A RESOURCE FOR INVESTORS
HOME PROPOSED BOARD NEWS PRESS RELEASES CONTACT
Strategic Software Holdings Proposes Acquisition of Mercator Software
Click here to read Strategic Software Holdings' preliminary proxy statement to
the Securities and Exchange Commission
ATTENTION: MERCATOR SOFTWARE INC. STOCKHOLDERS
Strategic Software Holdings has initiated an effort to replace the current
Mercator board of directors with a new slate of directors that have a wealth of
skill and experience in technology, the software industry and specifically the
enterprise applications space.
The reasons for this change are numerous. Under the current Board of Directors
and senior management:
o Mercator's stock price has plummeted from a high of $142 per share on
March 7, 2000 to just $1.33 per share as of March 12, 2003 (see the
historical stock price chart);
o Mercator's market position collapsed from 3rd to 10th between 1999 and
2001, and its Enterprise Application Integration (EAI) market share
fell from 10% to 4.7% over the same period;
o Mercator's revenue has declined dramatically, down from $138.3 million
to $111.9 million in 3 years;
o Yet Mercator's research and development spend has been wasted,
increasing from 15% to 19% of revenue over the same time from 2000 to
2002.
If you own stock in Mercator we encourage you to visit this site in coming weeks
for announcements and information, as well as instructions to join this campaign
for greater value for Mercator shareholders.
On March 14, 2003, Strategic Software Holdings filed a preliminary proxy
statement with the Securities and Exchange Commission, announcing its intention
to nominate a slate of directors to replace the current board of directors of
Mercator (Nasdaq: MCTR) at the company's next annual meeting in May. INVESTORS
AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER PROXY
SOLICITATION MATERIALS, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of
the preliminary proxy statement and the definitive proxy statement (when it is
available) and other documents filed by SSH with the Commission at the
Commission's website at http://www.sec.gov/. In addition, you may obtain a free
copy of the definitive proxy statement (when it is available) by contacting
Innisfree M&A Incorporated toll free at (888) 750-5834 (banks and brokers call
collect at (212) 750-5833). Detailed information regarding the names,
affiliations and interests of individuals who may be deemed participants in the
solicitation of proxies of Mercator stockholders is available in the preliminary
proxy statement filed by SSH with the Commission on Schedule 14A today.
Strategic Software is an investment firm that makes equity investments and
acquisitions on behalf of itself and its investors. Based in Westport,
Connecticut, the firm draws on its partners' extensive knowledge of all aspects
of the enterprise software industry to execute strategic transactions.
Strategic Software is concerned by what it considers to be Mercator's poor
performance in recent years and has decided to seek the election of its slate of
directors in an attempt to deliver greater value to the shareholders.
RELATIVE STOCK PERFORMANCE
MCTR
[PERFORMANCE GRAPH OMITTED]
Date MCTR NASDAQ Peer Group
---- ---- ------ ----------
1-Mar-00 0 0 0
5-Sep-00 -83.2 -19.05 -34
5-Mar-01 -94.53 -58.23 -83.28
4-Sep-01 -98.04 -65.66 -92.13
4-Mar-02 -94.54 -60.73 -82.30
3-Sep-02 -98.57 -73.64 -96.07
3-Mar-03 -98.69 -73.44 -95.77
HISTORICAL STOCK PRICE MCTR
3/01/200- - PRESENT
[PERFORMANCE GRAPH OMITTED]
Date MCTR NASDAQ Peer Group
---- ---- ------ ----------
1-Mar-00 0 0 0
5-Sep-00 -83.2 -19.05 -34
5-Mar-01 -94.53 -58.23 -83.28
4-Sep-01 -98.04 -65.66 -92.13
4-Mar-02 -94.54 -60.73 -82.30
3-Sep-02 -98.57 -73.64 -96.07
3-Mar-03 -98.69 -73.44 -95.77
NAME AND BUSINESS PRESENT PRINCIPAL OCCUPATION AND
ADDRESS AGE FIVE YEAR BUSINESS EXPERIENCE
================================================================================
Rodney Bienvenu 37 Mr. Bienvenu is currently Chairman and CEO
1465 Post Road East of Strategic Software. Prior to his current
Westport, CT 06880 position, he served as Chief Planning
Officer and President, divine Software
Services, a division of divine, inc., a
publicly traded software company. He was
President and CEO of SageMaker, Inc., a
digital asset management provider, for more
than five years prior to 2001.
Peter J. Boni 57 Mr. Boni is currently Chairman & CEO of
10 Maguire Road, Suite 332 Surebridge, Inc., an outsourcer of software
Lexington, MA 02421 applications, IT infrastructure and business
processes. He has over 20 years' experience
as a high technology CEO. Mr. Boni was
previously CEO of Prime Response, an
applications software company. Prior to his
employment with Prime Response, Mr. Boni was
President and CEO of Cayenne Software until
its acquisition by Sterling Software.
Previously, Mr. Boni served as president of
the Software and Information Services Group
of Paramount Communications, Inc. (now
Viacom, Inc.).
Daniel Hoogterp 43 Mr. Hoogterp is founder and CEO of TQuist.
3 Cherry Hill Circle, Mr. Hoogterp also presently serves as a
Suite 102, Monroe, CT 06468 technology advisor to several firms,
including GlobalNet Venture Partners, LLC
and ECS Energy, Inc. Prior to TQuist, he
served as EVP and Chief Technology Officer
of Enamics, Inc., a provider of Business
Technology Management software. Prior to
Enamics, he served as CTO of SageMaker,
Inc., an enterprise portal software firm.
Prior to SageMaker, Mr. Hoogterp was founder
and CEO of Retrieval Technologies Inc.
(RTI), a real time news and multimedia
product firm, which merged with SageMaker in
1999. Prior to RTI, he had instrumental
roles in technology development for products
of IBM, MCI, Sprint, and Industrial Network
Solutions.
Edward Sanchez, Jr. 37 Mr. Sanchez wholly owns and controls ES
150 E. 52nd St. 2nd Floor Advisors LLC, a Delaware limited liability
New York, NY 10022 company established in 2001. ES Advisors is
the General Partner for ES Capital Partners
LLP, a technology investment fund. For more
than five years prior to the formation of ES
Advisors, Mr. Sanchez served as a fund
manager for Travelers Insurance (a division
of CitiGroup).
Sean P. Sears 42 Since 2000, Mr. Sears has served as
TD Centre 1791 Barrington President and Chief Executive Officer of
St., 4th Floor Halifax, abridean, inc., a privately held software
Nova Scotia B3J 3K9 Canada company that he founded. From 1998 through
2000, Mr. Sears was president of Ogden Pong
Venture Management, a private investment
firm that he founded. Previously, he
co-founded and was President of Cycor
Communications, a nation internet service
provider.
Michael R. Wodopian 50 Mr. Wodopian is currently the Director of
9750 Goethe Road, Marketing, Optical Products Group with Intel
Sacramento, CA 95827 Corporation, the world's largest chip maker,
and a leading manufacturer of computer,
networking and communications products, and
he has held a number of general management,
business development and marketing positions
within Intel since 1999, when he joined
Intel through its acquisition of Level One
Communications. At Level One Communications,
Mr. Wodopian was the Vice President of
Business Development and Strategic Planning.
On March 14, 2003, Strategic Software Holdings filed a preliminary proxy
statement with the Securities and Exchange Commission, announcing its
intention to nominate a slate of directors to replace the current board of
directors of Mercator (Nasdaq: MCTR) at the company's next annual meeting in
May. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT AND
ANY OTHER PROXY SOLICITATION MATERIALS, WHEN THEY BECOME AVAILABLE, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and security holders may obtain a free copy of the preliminary
proxy statement and the definitive proxy statement (when it is available) and
other documents filed by SSH with the Commission at the Commission's website
at http://www.sec.gov/. In addition, you may obtain a free copy of the
definitive proxy statement (when it is available) by contacting Innisfree M&A
Incorporated toll free at (888) 750-5834 (banks and brokers call collect at
(212) 750-5833).
Detailed information regarding the names, affiliations and interests of
individuals who may be deemed participants in the solicitation of proxies of
Mercator stockholders is available in the preliminary proxy statement filed
by SSH with the Commission on Schedule 14A today.
April 1, 2003
Bloomberg
Strategic Software Says Mercator Won't Discuss Offer
Dow Jones Business News
Strategic Software: Mercator Refuses Talks
Reuters
UPDATE - Strategic Software says Mercator no go on buyout
The Deal.com
Strategic Software ignored by Mercator Software
The Hartford Courant
Takeover Offer Lifts Mercator Shares
MARCH 31, 2003
Bloomberg
Mercator Receives $72.5 Million Offer From Investor Bloomberg Interview (
transcript )
Strategic Software's Bienvenu: Offer for Mercator
Dow Jones News Service
Strategic Software Makes $75M Bid For Mercator
Reuters News
Strategic Software to buy Mercator for about $74 mln.
The Deal.com
Minority shareholder bids for Mercator
Schedule 13D click to read (pdf)
MARCH 18, 2003
The Deal.com
Mercator fires back at investor
MARCH 17, 2003
Proxy Statement click to read (pdf )
MARCH 15, 2003
Greenwich Time/Stamford Advocate
Mercator target of takeover firm
On March 14, 2003, Strategic Software Holdings filed a preliminary proxy
statement with the Securities and Exchange Commission, announcing its
intention to nominate a slate of directors to replace the current board of
directors of Mercator (Nasdaq: MCTR) at the company's next annual meeting in
May. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT AND
ANY OTHER PROXY SOLICITATION MATERIALS, WHEN THEY BECOME AVAILABLE, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and security holders may obtain a free copy of the preliminary
proxy statement and the definitive proxy statement (when it is available) and
other documents filed by SSH with the Commission at the Commission's website
at http://www.sec.gov/. In addition, you may obtain a free copy of the
definitive proxy statement (when it is available) by contacting Innisfree M&A
Incorporated toll free at (888) 750-5834 (banks and brokers call collect at
(212) 750-5833).
Detailed information regarding the names, affiliations and interests of
individuals who may be deemed participants in the solicitation of proxies of
Mercator stockholders is available in the preliminary proxy statement filed
by SSH with the Commission on Schedule 14A today.
April 1, 2003
Strategic Software Holdings Says Mercator Software Refuses to Engage in
Meaningful Discussions
March 31, 2003
Strategic Software Holdings Proposes Acquisition of Mercator Software
March 18, 2003 (pdf)
Strategic Software Holdings Requests Mercator Software Shareholder List
March 14, 2003
Strategic Software Holdings Announces Slate of Director Nominees for Mercator
Software Inc.
On March 14, 2003, Strategic Software Holdings filed a preliminary proxy
statement with the Securities and Exchange Commission, announcing its intention
to nominate a slate of directors to replace the current board of directors of
Mercator (Nasdaq: MCTR) at the company's next annual meeting in May. Investors
and security holders are urged to read the proxy statement and any other proxy
solicitation materials, when they become available, because they will contain
important information.
Investors and security holders may obtain a free copy of the preliminary proxy
statement and the definitive proxy statement (when it is available) and other
documents filed by SSH with the Commission at the Commission's website at
http://www.sec.gov/. In addition, you may obtain a free copy of the definitive
proxy statement (when it is available) by contacting Innisfree M&A Incorporated
toll free at (888) 750-5834 (banks and brokers call collect at (212) 750-5833).
Detailed information regarding the names, affiliations and interests of
individuals who may be deemed participants in the solicitation of proxies of
Mercator stockholders is available in the preliminary proxy statement filed by
SSH with the Commission on Schedule 14A today.
For more information please contact:
MEDIA RELATIONS:
Brunswick Group
Lekha Rao
Wendel Carson
Tel: 212-333-3810
Email: savemercator@brunswickgroup.com
INVESTOR RELATIONS:
Innisfree M&A Corporation
Arthur Crozier
Peter Walsh
Tel: 212-750-5833
On March 14, 2003, Strategic Software Holdings filed a preliminary proxy
statement with the Securities and Exchange Commission, announcing its
intention to nominate a slate of directors to replace the current board of
directors of Mercator (Nasdaq: MCTR) at the company's next annual meeting in
May. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT AND
ANY OTHER PROXY SOLICITATION MATERIALS, WHEN THEY BECOME AVAILABLE, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and security holders may obtain a free copy of the preliminary
proxy statement and the definitive proxy statement (when it is available) and
other documents filed by SSH with the Commission at the Commission's website
at http://www.sec.gov/. In addition, you may obtain a free copy of the
definitive proxy statement (when it is available) by contacting Innisfree M&A
Incorporated toll free at (888) 750-5834 (banks and brokers call collect at
(212) 750-5833).
Detailed information regarding the names, affiliations and interests of
individuals who may be deemed participants in the solicitation of proxies of
Mercator stockholders is available in the preliminary proxy statement filed
by SSH with the Commission on Schedule 14A today.
MERCATOR TARGET OF TAKEOVER FIRM
BY JIM ZEBORA
Business Editor
GREENWICH TIME (and STAMFORD ADVOCATE)
March 15, 2003
A Westport-based investment firm is aiming to take over Wilton-based Mercator
Software Inc., a specialist in linking incompatible business computer systems
that fell on hard times several years ago and has yet to recover.
Strategic Software Holdings filed a preliminary proxy statement yesterday with
the Securities and Exchange Commission, saying it will nominate a slate of
directors to replace Mercator's current board.
The election will take place at the company's next annual meeting in May.
"Shareholders must act before their investments dwindle to nothing," said SSH
Chairman and Chief Executive Officer Rodney Bienvenu. "As Mercator's largest
shareholder, we are taking this action because the current board has steered the
company into a precarious situation and the company lacks a realistic strategy
for creating shareholder value."
Mercator's shares have fallen from a high of $142 three years ago on March 10,
2000, the zenith of the dot-com bubble, to a low of 66 cents on Nov. 1, 2002.
The stock closed yesterday at $1.26, down 14 cents on the day.
In August 2000, Mercator said its results for the first half of that year were
inaccurate after the company failed to report about 4 percent of its expenses,
about $2.4 million.
A management shake-up began with that restatement. Roy C. King became president
and chief executive officer in January 2001, replacing company founder Constance
F. Galley, who resigned in November 2000. The company's CFO also left under a
cloud.
Mercator laid off hundreds of workers as it struggled to get its finances under
control. It has also struggled to keep revenues growing in a competitive market
for business integration software.
Mercator last December agreed with the SEC to settle an investigation into the
company's financial reporting for 2000, saying it would not oppose an SEC
administrative order not to violate financial reporting standards. In November,
Mercator paid $8.2 million to end an investor law suit sparked by the company's
steep stock price decline two years before.
The company was mum last evening on the move by Strategic Software Holdings to
gain control.
"We have no comment from Mercator today," Mercator spokesman Jonathan Cohen
said. "A comment from Mercator will be forthcoming, but not today." Copyright
(C) 2003, Southern Connecticut Newspapers, Inc.
MERCATOR FIRES BACK AT INVESTOR
by David Shabelman in Chicago
THE DAILY DEAL
Updated 06:02 PM EST, Mar-17-2003
A dissident shareholder in MERCATOR SOFTWARE INC. on Monday denied the company's
allegations that his investment group is staging a proxy fight against the
integration software vendor only to generate a quick profit.
"We are disappointed that a small group of dissidents whose interests clearly
appear to be focused on short-term gains would seek to change the direction of
the company at such a propitious moment," Mercator CEO Roy King said Monday,
March 17, in a statement responding to a March 14 proxy filing by STRATEGIC
SOFTWARE HOLDINGS. SSH controls 4.85% of Mercator and is nominating seven
candidates to the board of the Wilton, Conn.-based company.
While dismissing the charge that he is focused on "short-term gains," SSH chief
executive Ron Bienvenu did say Mercator must take prompt action to salvage the
company, whose business has steadily eroded since 2000.
"If Mercator continues along its path, management will continue to draw their
salaries, the board will just sit there and do nothing and investors won't have
a long term," he said. "We're the only hope for the long term of the company."
Bienvenu said Mercator's management has rejected his recommendation that the
company hire an investment banker to seek a sale, among other options.
Bienvenu is the former CEO of SageMaker Inc., a software company acquired in
2001 by DIVINE INC., which recently filed for bankruptcy protection. He takes
Mercator to task for not moving more aggressively to position itself for an
eventual increase in technology spending.
"Large corporations are very wary of betting on small companies," he said.
"Large companies become conservative and stick with market leaders, and
Mercator's market share will dwindle until it disappears. If I'm selling against
Mercator, I'd kick their ass."
A Mercator spokeswoman declined comment. In its statement the company says its
share of the enterprise application integration market increased from 9.9% to
10.5% in 2002 and that its operating performance exceeded that of rivals
An analyst who asked not to be identified predicted that Mercator, and other
small integration software companies such as SEEBEYOND TECHNOLOGY CORP. of
Monrovia, Calif., and VITRIA TECHNOLOGY INC. of Sunnyvale, Calif., will continue
to lose market share to industry leaders TIBCO SOFTWARE INC. of Palo Alto,
Calif., and WEBMETHODS INC. of Fairfax, Va.
"Most of the customers going forward will buy integration technologies from
Tibco and webMethods, and the rest will struggle to maintain their viability,"
he said. "The smaller companies don't have the financial resources to spend on
R&D and sales and marketing required to" match bigger competitors.
If SSH wins control of Mercator's board, Bienvenu said it would look at all of
its options, including selling the company, making an acquisition or SSH moving
to buy it outright. He said the company's value is not in its intellectual
property but its user base, which stands at 1,100 customers.
"They have a great, entrenched customer base but need to be combined with the
right organization to take advantage of it," he said.
Shares of Mercator, whose market capitalization is $46 million, rose 5.6% Monday
to close at $1.33 on the Nasdaq. The stock is down from its 52-week high in
March 2001 of $6.10 per share and only a fraction of its all-time high of
$149.88 in March 2000, when Mercator's market cap peaked at $5 billion.
Mercator's software helps customers link technologies between different computer
applications. In the fourth quarter, Mercator reported revenues of $32.3
million, up 28% sequentially from revenues of $25.3 million but down 7% from the
$34.7 million reported in the year-ago period.
The analyst said Mercator's fortunes dwindled as corporate technology spending
fell and as the mcompany competed head-to-head with Tibco and webMethods.
Mercator also had some financial reporting issues in 2000 that contributed to
its woes, he said.
In December 2002, Mercator announced it had reached an agreement with the
Securities and Exchange Commission regarding an overstatement in the company's
first two quarters of 2000. The company had underreported $2.4 million, or 4% of
its total expenses. In December the company announced it had paid $8.2 million
to settle shareholder litigation initially filed against the company for
overstating its income and profits.
Bloomberg (www.bloomberg.com)
March 31, 2003
New York
STRATEGIC SOFTWARE'S BIENVENU: OFFER FOR MERCATOR
Transcript of interview
Jonathan Make: I am Jonathan Make with a Bloomberg Multimedia Interview with Ron
Bienvenu. He is the Chairman of Strategic Software Holdings LLC. He is
joining me by telephone from New York. We are talking about his
company's offer to buy Mercator Software for about $73 million. The
offer comes after shares of Mercator Software have fallen about 72% in
the past year, along with many other software companies. The shares
have fallen and the company has cut jobs. Strategic Software is
offering 40% more than the closing share price for Mercator, which sent
Mercator shares up - although not up as high as the offer is indicating
that investors may be concerned about the company accepting the offer.
Ron, why is Mercator going to take your offer now?
Ron Bienvenu: Well, we are hopeful that they will take our offer because we
believe that, where they have ended up in the market space, their
slipping in market share puts them in a precarious position. They have
a very good asset in their customer base, they have great technology,
but in the particular market where they find themselves, if you're not
a top-three, top-five player, it is getting more and more difficult to
get additional customers. So we believe that it is in the best interest
of all shareholders to take the company, take it private and run it in
a fundamentally different way than it has been run historically. We
think it is going to be a long time before this company sees this kind
of share price and we think it is a very fair price for the company.
JM: The company has said today that it is considering your offer, which a
spokesman tells me that they just received this morning. They are
saying that they will give it their full consideration. Often, Ron, in
a situation such as this, the company that has received a bid will
consider it, they'll reject it and then they will enter talks with you,
the potential acquirer, [a foreign acquisition] at a slightly higher
price. You say that your offer is fair - what's your indication of what
the company will do and would you be willing to enter talks with them
about a higher price to actually get a sale agreement and to not have
to go through a shareholder proxy or other measures?
RB: Well, as you know, we have already filed our own Board slate and that's
putting pressure on the company, we understand that. We believe it is
the right thing to do. But, we have offered, in our letter this morning
to the company, to meet with them tomorrow to explain all the
contingencies in our letter, which I think might be explaining some of
the market's hesitancy, and sit with them and come to a deal that is
friendly.
We're interested in buying this company and taking it private. Any kind
of protracted battle is not good for the company. We understand that
and it is not in anybody's best interest and as long term players,
that's what we are focused on. We hope to meet with the company
tomorrow. We had a meeting scheduled, on their request last week, for
tomorrow. Over the weekend we were unable to get that meeting agreed to
because they kept asking us for additional information that we weren't
prepared to give them outside of a face-to-face meeting. But we remain
hopeful that we can meet with them tomorrow and we'll come to a speedy
agreement on something that's great for all shareholders. And we'll
conclude this transaction as quickly as possible.
JM: Other investments your firm manages or other companies that you have
bought, you had mentioned some of them before we began this interview,
they are all privately held. Why should an investor in Mercator trust
you to do a better job with the management team you propose to bring
in?
RB: I think you're asking two different things. If you are saying, why our
Board slate...why let us bring our management team in there to run the
company as a public company...there are a lot of reasons, but we,
intentionally, have not started to explain that to the shareholder base
yet. We have a very solid plan, we have a very solid management team
and we're more than happy to explain that to people when the time is
right. But the second thing you are asking is...the make-up of our
pitch to the company has shifted as of this morning. We're saying, here
is $2.17 a share in cash, that's a 40% premium over market on Friday
and that's a 60+% premium since the beginning of the year for average
share price and what we are arguing to the shareholders today is that
this is a full and fair price. It will be a long, long time - and
frankly, we don't believe the current management team will ever see
this level of pricing for this company again. The company is being
marginalized in the marketplace and unless actions are taken to stem
that, this company, as T.S. Elliot in a poem once said: "This is the
way the world ends, this is the way the world ends, this is the way the
world ends, not with a bang, but a whimper." That is what we think is
happening to Mercator as a company and we think shareholders should
accept our offer - it is a good offer, it's a fair offer. They can take
their money and invest it in other things if they'd like. So our pitch
today is not do we have a better plan, our pitch today is here's a
price. We'll take this company private and take the risk we need to
take in order to execute on a very long-term strategy.
JM: Ron, one final question - and thank you for the poetry from T.S.
Elliott - many companies, not just Mercator, might be better run as a
private company because of how the market is valuing them. Do you agree
with this statement and (in the 45 seconds we have left), why is this
so?
RB: We certainly agree. Why is it so? It is so because the enterprise
software market has reached a level of maturity where the current
business models for many of these companies are no longer valid. We
believe that very strongly. We believe these companies are inefficient,
they're not generating the kind of returns a shareholder should expect
and they won't. The market has changed. There is no more Y2K driving
adoption rates. The enterprise buyer is more conservative and more
cautious. Companies have enough technology. What they need today is to
implement that technology and manage it more effectively to really add
value to their bottom line - the customer's bottom line. So I think a
lot of these companies are still living in the late 90s and early 2000
and those models are no longer valid.
JM: Thank you, Ron Bienvenu, Chairman of Strategic Software Holdings LLC, based
in Westport, CT but joining me by phone from New York today on his company's
offer for Mercator Software.
Reuters
Strategic Software to buy Mercator for about $74 mln
Monday March 31, 10:01 am ET
NEW YORK, March 31 (Reuters) - Strategic Software Holdings, a private investment
firm, said on Monday it planned to acquire Mercator Software (NasdaqNM:MCTR -
News) in an all-cash bid worth about $74 million.
Strategic Software said it offered $2.17 a share for each share of Mercator
outstanding, representing a 40 percent premium over the company's $1.55 closing
price on Friday.
Strategic Software, which currently own 1.6 million shares of Mercator, said it
made the offer in a letter to Mercator's board on Monday.
It said it filed a preliminary proxy statement with the Securities and Exchange
Commission (News - Websites) available at http://www.sec.gov/. It did not say
when a definitive proxy statement would be available.
Mercator Software -- which competes with International Business Machines Corp.
(NYSE:IBM - News) among others in the market for software that enables different
computer systems to be stitched together -- has been hit hard as businesses have
slashed their technology spending to counter a weak U.S. economy.
Dow Jones Business News
Strategic Software Makes $75 Million Bid for Mercator
Monday March 31, 12:28 pm ET
By Janet Whitman
NEW YORK -- Strategic Software Holdings, a dissident investor in Mercator
Software Inc. , has made an unsolicited all-cash bid for the software company
worth about $75 million.
The investment firm, which owns nearly 5% of Mercator's stock, or 1.6 million
shares, disclosed the offer in the form of a "bear-hug" letter to the company's
board dated Monday, a copy of which was obtained by Dow Jones Newswires.
The friendly takeover bid, which could turn hostile, marks the latest attempt by
the investor group to wrest control of the downtrodden Wilton, Conn., software
concern in an attempt to improve shareholder value.
On March 14, Strategic Software, an equity investment and buyout firm
specializing in software, disclosed a plan to nominate a slate of directors to
replace Mercator's board at the company's next annual meeting in May.
"Over the past several months, (Strategic Software) has approached several
members of your management team and board to discuss working together to develop
a plan for stopping the hemorrhage of value that has occurred under current
leadership," Rodney Bienvenu, Strategic Software's chairman and chief executive,
said in the letter to the board. "Each and every time our suggestions for
working together to deliver greater value to the shareholders have been
rejected. After careful review of our options, we have concluded that it would
be desirable for (Strategic Software) to acquire Mercator."
In the letter, Mr. Bienvenu said Strategic Software, Westport, Conn., has "a
reasonable belief that it will have the means to consummate the proposed
acquisition."
Under the terms of the deal, the investment firm is offering Mercator $2.17 a
share. The offer represents a 40% premium to Mercator's closing stock price of $
1.55 on Friday.
Like many small technology companies, Mercator has seen its business steadily
erode since the burst of the tech bubble. The company's stock price reached an
all-time high of more than $140 in March 2000. Now, however, with the air out of
the tech bubble and corporate spending on new technologies ground to a near
standstill, Mercator is struggling.
Mr. Bienvenu, a former CEO of SageMaker Inc., a software company acquired in
2001 in an all-stock deal by Divine Inc., which has since filed for bankruptcy
protection, said in the letter that his firm has "ongoing concerns that the
value of Mercator is not being maximized for the benefit of stockholders."
A spokeswoman for Mercator confirmed that the company received Strategic's
takeover proposal.
"We will give it our full consideration and respond appropriately," she said.
Mercator's stock price shot to a high of $1.87 a share in early-morning trading
following the news of the takeover bid. In midday trading on the Nasdaq Stock
Market (News - Websites), shares of Mercator were up 20 cents, or 13%, at $1.75.
Under the proposed deal, Mercator would be taken private, Mr. Bienvenu said in
an interview later on Monday.
"That would be the ideal scenario, although I wouldn't rule out other (
possibilities)," he said. "We will work with the company to structure a deal
that's beneficial to getting the deal done."
Mr. Bienvenu likened his plan to reshape Mercator to making sausage. "We would
take the company and put it through some significant strategic shifts," he said.
"We wouldn't entirely rule out keeping it public, but what we want to achieve is
best done as a private company."
Since the news of the acquisition proposal hit the wire early Monday, Mr.
Bienvenu said he has been contacted by at least four large Mercator shareholders
who said they support his takeover plan.
"It will be a long time before the stock would see the price we are offering,"
said Mr. Bienvenu. "It's an opportunity for investors to take some cash off the
table."
For Strategic Software, the deal represents a long-term bet that the enterprise
software market is going to be transformed over the next few years and Mercator
will be repositioned to benefit from that transformation.
The investment firm has "a number of financing sources lined up" to fund the
buyout, Mr. Bienvenu said. He declined to name them but said they were "names
that everyone would know."
Strategic Software hopes to meet with Mercator on Tuesday to discuss the deal.
-By Janet Whitman; Dow Jones Newswires; 201-938-5248; janet.whitman@dowjones.com
MERCATOR RECEIVES $72.5 MILLION OFFER FROM INVESTOR (UPDATE1)
By Jonathan Make
Wilton, Connecticut, March 31 (Bloomberg) -- Mercator Software Inc., a maker of
products that link computer systems, received a takeover proposal from an
investor offering $72.5 million. Strategic Software, which already owns 1.6
million shares of the company, offered $2.17 a share, it said in a statement.
That is 40 percent more than Friday's closing price. Mercator said it will
consider the bid.
The investor has made several attempts to discuss how to improve Mercator's
results after market share fell, Strategic Software Chairman Rodney Bienvenu
said. He wants to take it private and run Mercator with executives selected by
his closely held firm to boost sales of software to businesses. Mercator stock
fell 72 percent in the past year as it fired workers.
"We just received the formal proposal this morning," said Mercator spokesman
Jonathan Cohen. "We are looking at it closely."
Strategic Software, which is seeking to meet with Mercator executives tomorrow,
hopes to avoid a "protracted battle" to acquire the company, Bienvenu said.
"We do not believe the current management team will ever see an offer as full as
this for the company," he said. "It is getting more and more difficult for them
to get more customers." Shares of Wilton, Connecticut-based Mercator rose 24
cents, or 15 percent, to $1.79 as of 13:06 p.m. New York time in Nasdaq Stock
Market trading.
Mercator "will give it our full consideration, and will respond accordingly,"
Cohen said, referring to the bid from Westport, Connecticut-based Strategic
Software. He wouldn't elaborate.
The offer includes the purchase of about 33.4 million shares not already owned
by the investor, said Strategic Software spokeswoman Wendell Carson, who works
for Brunswick Group. The bid doesn't involve the assumption of debt, she said.
MINORITY SHAREHOLDER BIDS FOR MERCATOR
by David Shabelman in San Francisco [mailto:dshabelman@thedailydeal.com], The
Daily Deal ----------------------------------
Updated 05:44 PM EST, Mar-31-2003
Investment firm STRATEGIC SOFTWARE HOLDINGS, which in mid-March announced plans
to launch a proxy challenge against MERCATOR SOFTWARE INC., is now proposing to
buy the company.
SSH offered Monday, March 31, to pay $2.17 per share, or $75 million, for
Wilton, Conn.-based Mercator, a 40% premium over the company's closing stock
price Friday of $1.55 per share. SSH owns 4.6% of Mercator.
Ron Bienvenu, CEO of Westport, Conn.-based SSH, said his plan is to buy the
company and take it private. He said he decided to pursue a buyout after failing
to reach consensus with Mercator management about how to revive the ailing
software vendor.
"The reason we decided to move forward is we feel there is significant
shareholder support to do a transaction of that nature, and it's the right thing
to do for the company," Bienvenu said. "It was a decision we had to make at some
point; we were just hoping the company would cooperate more."
Jonathan Cohen, vice president of corporate communications at Mercator, said the
company is reviewing SSH's offer. "We received the formal proposal this
morning," he said. "We are studying it carefully and giving it all due
consideration and will respond accordingly."
Bienvenu said he had preliminary discussions with Mercator regarding a deal last
week, but talks broke down when he was unwilling to provide the company with a
detailed strategic plan. Mercator said it would proceed with a face-to-face
meeting with Bienvenu scheduled for Tuesday. Cohen said he did not know the
status of the meeting.
Bienvenu said he has lined up equity financing from a number of "late-stage
funding sources," though he declined to provide specifics. John Cooper, managing
director with Santa Monica, Calif.-based DIGITAL COAST PARTNERS LLC, is acting
as financial adviser for SSH. Kyle Badger, partner with Chicago-based MCDERMOTT,
WILL & EMERY, is handling legal affairs for SSH.
SSH on March 14 filed a proxy statement nominating seven candidates for
Mercator's board of directors. Bienvenu said the proxy vote is tantamount to a
vote on the proposed acquisition.
"This is a very big premium over where the company is trading and where I think
it will ever trade again," Bienvenu said. "We're offering a full and fair value
for the company, and it's our hope that shareholders will support it."
Mercator's software helps customers link disparate computer applications. The
company has enlisted JENKENS & GILCHRIST LLP of Dallas as its legal adviser;
Mercator declined to say if it has hired a financial adviser. On Monday shares
of the company traded at $1.71, up 10.3%, though still at a discount to SSH's
offer.
Bienvenu is the former CEO of SageMaker Inc., a software company that was bought
by now-bankrupt DIVINE INC. in 2001. "Everybody is waiting on what the company
has to say," he said. "Is the company going to support this or not? I think a
lot of people are doubtful the company is going to support this."
THE DEAL.COM
AMERICAS IN BRIEF
edited by Greg Johnson
Updated 05:49 PM EST, Apr-1-2003
STRATEGIC SOFTWARE IGNORED BY MERCATOR SOFTWARE
STRATEGIC SOFTWARE HOLDINGS said late Tuesday, April 1, that MERCATOR SOFTWARE
INC. has refused to engage in "meaningful discussions" with the investment firm
regarding its $75 million buyout offer. On March 31, Westport, Conn.-based SSH
offered $2.17 a share for Wilton, Conn.-based Mercator, whose software helps
customers link technologies between different computer applications. A Mercator
spokesman said the company did meet with SSH and will put out a formal response
after discussing details of the meeting with its board of directors. -- David
Shabelman
Reuters
UPDATE - Strategic Software says Mercator no go on buyout Tuesday April 1, 5:53
pm ET
NEW YORK, April 1 (Reuters) - Investment company Strategic Software Holdings
said on Tuesday Mercator Software Inc. (NasdaqNM:MCTR - News) refused to engage
in discussions about its $74 million takeover bid.
Strategic Software on Monday offered to acquire Mercator in an all-cash bid
worth $2.17 per share. The offer came less than three weeks after Strategic
Software said it would run its own slate of directors to replace the Wilton,
Connecticut-based company's board at its upcoming annual meeting.
Mercator Software -- which competes with International Business Machines Corp.
(NYSE:IBM - News), among others, in the market for software that enables
different computer systems to be stitched together -- has been hit hard as
businesses have slashed their technology spending to counter a weak U.S.
economy.
In a statement on Tuesday, however, Strategic Software said Mercator "refused to
engage in meaningful discussions" about the proposal, which represented a 40
percent premium over the company's $1.55 closing price on Friday.
"We came to the meeting this morning prepared to have a meaningful,
collaborative discussion on all elements of our proposal," Rodney Bienvenu,
chief executive of Strategic Software said. "They refused to even engage in
discussions on those terms," he added.
Jonathan Cohen, a spokesman for Mercator, said the company's management had met
with Strategic Software on Tuesday and "listened carefully to what they had to
say," he said.
He said the next step was for the management team to report back to Mercator's
board of directors. After that, and once the board has had enough time to review
the offer, Mercator will issue a formal response, Cohen said. He added that
there was no time frame for the response.
Earlier on Tuesday, investors pushed Mercator shares down as much as 5 percent,
on doubts the software company would accept the buyout offer. The shares closed
down 3.95 percent, or 7 cents, at $1.70 on the Nasdaq. On Monday, when the offer
was announced, the shares rose as much as 20 percent.
Mercator had previously lambasted Strategic Software's attempts to take over its
board, calling it an attempt by a "small group of dissidents" that was only
interested in short-term gains at a "propitious moment" in the company's
history. (Additional reporting by Tom Johnson)
Dow Jones Business News
Strategic Software: Mercator Refuses Talks
Tuesday April 1, 4:23 pm ET
NEW YORK (Dow Jones)--Strategic Software Holdings, a dissident investor in
Mercator Software Inc. (NasdaqNM:MCTR - News) , said Mercator has refused to
engage in " meaningful" discussions on Strategic's proposal to acquire the
company for $2.17 a share.
On Monday, Strategic Software, an equity investment and buyout firm specializing
in software, made an unsolicited all-cash bid for Mercator worth about $75
million. The offer represented a 40% premium over Mercator's closing stock price
of $1.55 on Friday.
In a press release Tuesday, Strategic said the two sides held a meeting earlier
in the day to discuss the proposal.
A Mercator spokesman said, "We have met with Strategic Software and listened to
their proposal. The next step is to report back to the board of directors after
which we will have a formal response."
The spokesman said no timetable has been set for the board to make a decision.
On March 14, Strategic Software, which owns a 5% stake in Mercator, disclosed a
plan to nominate a slate of directors to replace Mercator's board at the
company's next annual meeting in May.
Company Web site: http://www.mercator.com
-Stephen Lee; Dow Jones Newswires; 201-938-5400