Buy out time(can we pick 'em or what, Bob?):o)
biz.yahoo.com
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 |
