Business Services Industry
Mitchell-Wright Technology Group Issues Open Letter to Art Technology Group Inc.'s Shareholders Opposing Proposed Merger with Primus Knowledge Solutions
Business Wire, Sept 30, 2004
CINCINNATI -- Mitchell-Wright Technology Group LLC today issued the following open letter to all Art Technology Group Inc.'s (NASDAQ: ARTG) shareholders:
Dear Shareholders:
We believe that the proposed acquisition of Primus Knowledge Solutions, Inc. ("Primus"), under management's current plan, may result in further deterioration of shareholder value, because management's plan fails to extract the necessary cost synergies, and fails to protect the balance sheet. In our opinion, Art Technology Group, Inc. ("ATG") can be profitable today on a stand-alone basis, and can thrive without the proposed Primus acquisition.
For too long, ATG shareholders have allowed the Board to permit management to routinely miss stated guidance. For three of the last four quarters, and for each of the last two years management has failed to deliver on their stated financial goals. Also, we remain concerned that the interest of management and the Board are disconnected from those of shareholders, the true owners of ATG, as evidenced by a lack of commitment on behalf of management and the Board to turn the company profitable and their lack of significant ownership of the stock. Furthermore, the credibility of ATG leadership has been severely damaged by their inability to meet stated financial goals. Therefore in order for MWTG to support this merger, management and the Board need to not only present a plan that assures immediate profitability, but also provide shareholders with a mechanism to hold the leadership of ATG accountable for their actions.
We have tried to work with management and the Board to craft a solution that would enable management and the Board to earn our support and, we believe, broad shareholder support for the proposed merger with Primus. The elements of our proposal are found in our letter to the Company, dated August 18, 2004, filed with the Securities and Exchange Commission as an exhibit to our Schedule 13D on August 24, 2004. OUR GOAL has been and remains that the BOARD COMMIT TO A PLAN THAT DELIVERS PROFITABILITY and that corporate governance changes are enacted to ensure that the BOARD AND MANAGEMENT ARE HELD ACCOUNTABLE FOR THEIR ACTIONS. In the event management actions continue to deteriorate the value of our company, shareholders need a mechanism to protect shareholder value.
Shortly after we filed our preliminary proxy soliciting material in connection with our solicitation of proxies to vote against the merger with Primus, the Board provided us with an offer to our proposal made on August 18, 2004. The Board later made their offer available to the public by filing it with its Current Report on Form 8-K dated September 28, 2004. We determined that the Board's offer was unacceptable because it failed to address the key issues facing this company. In the offer, the Board did not commit to actions which would protect the balance sheet and also failed to commit to profitability. In addition, the offer failed to provide an appropriate level of Board accountability for shareholders to respond should management yet again fail to meet guidance and fail to turn the Company profitable.
Accordingly, we provided a counter proposal to the Company that sought the following:
1. Shareholder representation on the Board that includes two of
the nine post-merger directors, a minority position;
2. An agreement by the Board to provide the results of its
corporate governance review to shareholders by January 15,
2005;
3. A COMMITMENT, prior to voting on the merger agreement, to total
planned operating expenses for the 2005 fiscal year in the
$85-$90M range;
4. A COMMITMENT, prior to voting on the merger agreement, to a NET
CASH balance entering the 2005 fiscal year of no less than
$25M; and
5. Permission for us to continue to acquire shares, but no more
than 10% of the outstanding shares of the Company.
MWTG has been and remains committed to working with the Board and management to create shareholder value and after our settlement discussions, we are more confident than ever that this merger threatens the viability of ATG.
Absent a more sensible plan of merger with Primus, the Company has a greater likelihood of enhancing shareholder value with lower risk operating independently. For this reason we will vote AGAINST the merger with Primus, and we urge you vote AGAINST the merger as well.
We will soon be mailing you our proxy materials that will contain detailed information about our reasons for opposing the merger. Until you receive that information, we urge you not to return any proxy card sent to you by ATG's Board and management.
If you have any questions, please call our proxy solicitor, Innisfree M&A Incorporated, toll-free, at 1-888-750-5834.
Thank you for taking the time to review our proposal and for your continued support of Art Technology Group, Inc.
Very Respectfully,
James H. Dennedy
Managing Partner
Mitchell-Wright Technology Group, LLC
Mitchell-Wright Technologies Group, LLC, Mitchell-Wright, LLC, SSH partners I, LP, Arcadia Partners, L.P., Arcadia Capital Management, LLC, James Dennedy and Richard Rofe are participants in a solicitation of proxies from the shareholders of Art Technology Group, Inc. for use for use at its special meeting scheduled to be held on October 22, 2004. Information relating to these participants and certain other persons who may also be deemed to be participants in the solicitation of proxies is contained in their preliminary proxy statement filed with the Securities and Exchange Commission on September 27, 2004. A copy of that preliminary proxy statement is currently available at no charge on the Securities and Exchange Commission's website at http://www.sec.gov.
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