Vector Capital Proposes Acquisition of Captaris for $4.75 Per Share
March 17 2008 - 6:30AM
PR Newswire (US)
- Offer Represents a 36.1% Premium to Stock Price - SAN FRANCISCO,
March 17 /PRNewswire/ -- Vector Capital, a leading private equity
firm specializing in spinouts, buyouts and recapitalizations of
established technology businesses, today announced that it has made
a proposal to the Board of Directors of Captaris, Inc.
(NASDAQ:CAPA) to acquire all the outstanding common stock of
Captaris for $4.75 per share. This proposal represents an
approximate 36.1% premium above the closing price of Captaris stock
of $3.49 on March 14, 2008. The full text of the letter that Vector
Capital sent to Captaris' Board of Directors can be found below:
The Board of Directors c/o Bruce L. Crockett Non-Executive Chairman
of the Board Captaris, Inc. 10885 NE 4th Street, Suite 400
Bellevue, WA 98004 Dear Members of the Board of Directors: We are
delighted by the board's announcement to explore strategic
alternatives for Captaris, Inc. (the "Company"). This announcement
is long overdue. As Captaris' largest shareholder with an ownership
of 10.2%, Vector Capital ("Vector") is focused on ensuring that
your strategic exploration actually results in a speedy sale of the
Company at a premium value. We are, however, quite fearful that you
are embarking on this process without the true commitment to
complete it expeditiously. The Company has been "in play" for a
long time, has already contacted many potential acquirers, and has
throughout this process been represented by Credit Suisse, one of
the nation's most capable investment banks. Your announcement
merely acknowledges a process that has continued for many months.
Hiring another capable investment bank, RBC Capital Markets, to
replace Credit Suisse and conduct another strategic review comes
across as a delaying tactic. Your decision also imposes significant
additional costs on the shareholders. You will likely have to
compensate both banks for their services -- a highly unusual step
when selling a company with a $100 million market value. Despite
our repeated requests, you have refused to share with us the
timeline you intend to pursue. It is entirely unclear whether you
intend to take weeks or many more months or whether you are even
serious in your endeavor. Given your history of delays and broken
promises, we are understandably wary of the depth of the Company's
commitment to its sale. To bring about a necessary conclusion of
your strategic review, we would like to put forward Vector's
proposal to acquire all the outstanding common stock of Captaris
for $4.75 per share in cash. Our proposal represents an approximate
36.1% premium above the closing price of Captaris stock of $3.49 on
March 14, 2008. In addition, we would provide the Company with a
"go-shop" right, giving the board 30 days after the announcement of
the transaction to solicit offers from other interested parties.
Because we are focused on maximizing shareholder value, we will
also waive any and all rights to a break-up fee and seek only the
reimbursement of our out-of-pocket expenses in the event the board
accepts a superior competing offer during the "go-shop" period.
While our offer is subject to customary closing conditions and
extremely limited confirmatory due diligence, it is not subject to
any financing conditions. Our proposal, including the "go-shop" and
break-up fee concessions, is contingent on the Company entering
into a definitive agreement with Vector prior to April 4, 2008.
Since September 12, 2007, when we entered into a non-disclosure and
standstill agreement with the goal of exploring a transaction, we
have tried to engage with you in a constructive confidential
dialogue regarding a potential all-cash acquisition of the Company.
We have, on multiple occasions, offered you a proposal to acquire
the Company and have presented to you a detailed action plan to
sign a definitive agreement within 10 business days. We have also
proposed multiple frameworks to give you a finite amount of time to
continue to explore alternatives to our offer. Your apparent desire
to indefinitely continue your review of strategic alternatives
fails to exhibit the necessary urgency to deliver shareholder
value. Most importantly, during this period of delay, the stock
price has lost 35.6% of its value dropping from $5.42 on September
12, 2007, to $3.49 on March 14, 2008. We have watched with dismay
not only the reduction in the stock price of the Company but also
the deterioration in the Company's intrinsic value. Poor decisions
regarding the sale of the Company have been compounded by poor
decisions about acquisitions, use of cash, product priorities and
sales strategy. Even a few more months on the current path risks
additional permanent damage to Captaris' prospects and market
value. It is imperative that the Company be sold now and further
erosion to shareholder value be prevented. The proposal outlined
above adheres to a clear timeline, provides shareholders with a
price no less than $4.75, and allows the board the opportunity to
seek a higher price. Our offer is compelling and provides Captaris
shareholders an immediate and certain path to a premium, all-cash
transaction that will eliminate future market risk as well as the
risk of future value destruction. As you know, Vector has a
well-established history of working constructively -- and quietly
-- with management teams in the technology sector to maximize value
for all stakeholders. It is extremely rare for Vector to speak
outside the confines of the boardroom. We value both the insight
and input of management and board members when discussing strategic
alternatives. We chose to make this offer public because of our
belief that rapid action is necessary to protect shareholder value.
Again, it is our strong preference to work together immediately to
negotiate a definitive merger agreement. Vector, along with our
legal counsel, O'Melveny & Myers LLP and Wilson Sonsini
Goodrich & Rosati, are available immediately to discuss the
terms of our proposal and to negotiate a definitive agreement with
the Company. We look forward to discussing the above with you at
your earliest convenience. If we do not hear favorably from you by
5 p.m. PDT on March 21, 2008, we will assume you have no interest
in pursuing our proposal. This letter is not intended to create or
reflect any legally binding obligation by us regarding the proposed
transaction and no such obligation shall arise unless and until a
mutually acceptable definitive agreement is executed. Sincerely,
VECTOR CAPITAL CORPORATION Amish Mehta Authorized Signatory About
Vector Capital Vector Capital is a leading private equity firm
specializing in spinouts, buyouts and recapitalizations of
established technology businesses. Vector identifies and pursues
these complex investments in both the private and public markets.
Vector actively partners with management teams to devise and
execute new financial and business strategies that materially
improve the competitive standing of these businesses and enhance
their value for employees, customers and shareholders. Among
Vector's notable investments are LANDesk Software, Savi Technology,
SafeNet, Corel Corporation, Precise Software Solutions, Printronix,
Register.com, Tripos, WinZip and WatchGuard Technologies. For more
information, visit http://www.vectorcapital.com/. Contact Brunswick
Group Mike Buckley, 415-293-8461 Erin Becker, 212-333-3810
DATASOURCE: Vector Capital CONTACT: Mike Buckley, +1-415-293-8461
or Erin Becker, +1-212-333-3810, both of Brunswick Group for Vector
Capital Web site: http://www.vectorcapital.com/
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