UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Filed by a Party other than the Registrant |_|
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|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
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|_| Definitive Proxy Statement
|X| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-12
ASCENTIAL SOFTWARE CORPORATION
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(Name of Registrant as Specified in Its Charter)
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0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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ASCENTIAL SOFTWARE CORPORATION
50 Washington Street
Westborough, Massachusetts 01581
April 14, 2005
Dear Ascential Software Corporation Stockholder:
I am writing to you regarding the special meeting of stockholders being held
for the purpose of approving the proposed sale of our company to IBM. Our
board of directors continues to unanimously recommend that you vote "FOR"
approval of the proposal to adopt the merger agreement at the special meeting.
On or about April 1, 2005 we mailed to you a proxy statement that contains a
detailed description of the proposed merger and other information. This
supplement contains additional information and we urge you to read it and the
original proxy statement carefully as they contain information which may be
important for you to consider in connection with the merger and the special
meeting. Your vote is important. The affirmative vote of the holders of a
majority of the outstanding shares of Ascential's common stock is required to
adopt the merger agreement.
To vote your shares, if you have not yet done so, you may use the enclosed
proxy card or attend the special meeting in person. On behalf of the board of
directors, I urge you to sign, date and return the enclosed proxy card, or
vote via the Internet or by telephone, or follow the instructions for voting
provided by your broker or bank, as soon as possible, even if you currently
plan to attend the special meeting.
Thank you for your support of our company. I look forward to seeing you at the
special meeting.
Sincerely,
/s/ PETER GYENES
Peter Gyenes
Chairman and Chief Executive Officer
This proxy statement supplement is dated April 14, 2005, and is first being
mailed to stockholders of Ascential on or about April 14, 2005.
ASCENTIAL SOFTWARE CORPORATION
50 Washington Street
Westborough, Massachusetts 01581
SPECIAL MEETING OF STOCKHOLDERS
to be held on April 29, 2005
SUPPLEMENT DATED APRIL 14, 2005
TO PROXY STATEMENT DATED APRIL 1, 2005
GENERAL INFORMATION
This supplement is being mailed to the stockholders of Ascential Software
Corporation entitled to vote at the special meeting of stockholders being held
for the purposes set forth in the notice of special meeting and accompanying
proxy statement first mailed to stockholders on or about April 1, 2005. All
holders of record of Ascential common stock on the close of business of March
29, 2005, the record date, are entitled to vote at the special meeting and any
adjournment or postponement thereof. This supplement is being mailed to
stockholders on or about April 14 2005.
RECENT DEVELOPMENTS
As set forth in the proxy statement on page 30, on March 15, 2005 we, as well
as our directors and IBM, were named defendants in a purported stockholder
class action complaint filed in the Delaware Court of Chancery. On April 4,
2005, the plaintiff filed an amended purported class action complaint (the
"Amended Complaint"). The plaintiffs have also filed motions for expedited
proceedings and expedited discovery.
On April 12, 2005 we and the other defendants entered into a memorandum of
understanding with the plaintiff regarding settlement of the litigation. In
connection with the settlement, we have agreed to make certain additional
disclosures to our stockholders which are included in this proxy statement
supplement. Subject to the completion of certain confirmatory diligence by
counsel to the plaintiffs, the memorandum of understanding contemplates that
we will enter into a settlement agreement, which would then be subject to
customary conditions including court approval. The settlement will not affect
the merger consideration.
We and the other defendants vigorously deny all liability with respect to the
facts and claims alleged in the Amended Complaint and believe that all of the
plaintiff's claims are without merit, including their claims that the proxy
statement as originally mailed fails to disclose or only partially discloses
certain purportedly material information. We believe that the information
plaintiffs allege we should have disclosed either (1) was adequately disclosed
and discussed in the proxy statement or (2) is not required to be disclosed
under the federal securities laws or under applicable state law and is not
material as a matter of law or in the context of the matters to be considered
in connection with the special meeting. Nevertheless, as part of the
settlement, to avoid the risk of delaying or otherwise jeopardizing the merger
and to avoid the expense and burden of litigation, we have agreed to make this
additional information included in this proxy statement supplement available
to our stockholders.
Among other things, the Amended Complaint alleges (1) that the termination
fee, the rendering of Ascential's rights plan inapplicable to the transaction,
and the "no shop" provision included in the merger agreement prevent third
parties from coming forward; (2) that the $18.50 per share price in the merger
fails to value Ascential adequately in light of the Company's record earnings,
new products, anticipated growth and stock price; (3) that the pre-existing
relationships between IBM and Ascential have precluded any other suitor from
coming forward; (4) that Mr. Gyenes, our chief executive officer and member of
our board of directors, who is a named defendant in the complaint, has a
conflicting interest with those of other Ascential stockholders due to the
triggering of his change of control severance agreement, restricted stock
agreement, bonus plans and accelerated vesting of certain options; (5) that
Mr. Gyenes dominates and controls the board by virtue of having previously
worked elsewhere with other members of the board of directors and that the
members of our board of directors abdicated their fiduciary duties by agreeing
to the merger to permit Mr. Gyenes and our other officers to realize
substantial cash benefits currently; (6) that the Deutsche Bank Securities
Inc. analysis included in the proxy statement is flawed, specifically the
discounted cash flow analysis, and that the retention of Deutsche Bank was
procedurally flawed due to the relationships between IBM and Deutsche Bank;
(7) that we violated fiduciary duties of due care, loyalty and good faith; (8)
that members of our board of directors violated fiduciary duties of due care,
loyalty and good faith by agreeing to the terms of the merger, not properly
shopping the company and hastily entering into the merger with IBM to avoid
the second bidder; and (9) that the proxy statement is materially false and
misleading in that it fails to disclose material information required to
determine whether to vote in favor of the merger, including the parameters
initially set by IBM with Ascential to pursue a possible transaction, the
identity of the second bidder, the timing for our entering into an agreement
with IBM despite the existence of the second bidder, a discussion as to why
the board of directors decided to undertake the merger at this time, the
results of the review of strategic alternatives, why Deutsche Bank was
retained despite the fact that Deutsche Bank provided services to IBM and vice
versa, the compensation Deutsche Bank has received from IBM, the projections
used by Deutsche Bank in the discounted cash flow analysis and the discount
rates used by Deutsche Bank for the weighted average cost of capital, compared
with the discount rates derived by analysts for comparable companies, and an
explanation of the phrase "tax-effected EBIT," a metric Deutsche Bank used in
two of its analyses.
Background to the Transaction and the Board's Recommendation
As discussed in detail in the proxy statement on pages 20-23, prior to
entering into a confidentiality agreement with IBM on February 4, 2005, there
had been several discussions between IBM and us and our respective
representatives regarding a possible strategic transaction and it was only in
February of 2005 that we believed IBM expressed a willingness to consider
certain parameters, including a price range of $17.25 to $19.00 per share.
For a significant period of time prior to entering into an agreement with IBM,
management, independently and through investment bankers, including Deutsche
Bank, periodically discussed potential strategic transactions with potential
partners, which included the leading enterprise software vendors in the market
segments of integration, software platforms and applications and business
intelligence, concurrently with growing the business as an independent
company. Among these potential partners were current business partners, like
IBM and the second bidder; potential partners identified by management or
investment bankers; and potential partners who contacted us unsolicited.
Between May 2004 and the board meeting on March 11, 2005, Deutsche Bank
identified and contacted more than 10 parties considered to be potentially
viable strategic partners. These potential partners either indicated that they
would not be interested in a transaction, some because they believed that
their own internally developed solutions would be superior or sufficient to
compete, or evidenced no serious intention to enter into a transaction. These
discussions also confirmed our view that some of our competitors that offer
ETL functionality, such as Microsoft and Oracle, are increasing their
commitment to internally develop and improve their ETL solutions.
As discussed in the proxy statement, our board of directors approved the
transaction with IBM only after reviewing the current competitive landscape in
our industry and the other alternatives available to us (including continuing
to operate as an independent company) and the results of discussions with
other potential strategic partners, including IBM, over a lengthy period. The
board also reviewed the status of the current discussions with the second
bidder, which had informed Deutsche Bank on March 10 that it would require
several additional weeks of diligence to confirm its willingness to even move
forward at the price stated in the non-binding letter, that it would not
increase that price, that the consideration would not be all cash, and that it
was not willing at such time to provide any additional parameters. The board
of directors also considered the risk that if we did not enter into a
transaction with IBM now, we would not have another opportunity to do so. The
board of directors took into account the initiatives undertaken by current or
future competitors and the effects those initiatives would have on our ability
to compete as an independent company, particularly the fact that IBM had
indicated in the course of negotiations that if we did not timely enter into a
transaction with it, IBM would proceed with alternate plans to acquire and
develop comparable solution and might become a significant competitor.
Additionally, the board of directors was aware of the interests of certain
officers, including Mr. Gyenes, in the transaction, including the payments
under the previously disclosed restricted stock awards granted to such
officers in January 2005 and the new arrangements with IBM. Under the new
arrangements with IBM, our executive officers waived certain rights under
their existing severance agreements and would receive the same dollar amount
of severance to which they were entitled under their existing severance
arrangements with us, paid out either at the end of their respective
transition periods in the case of Messers. Gyenes, McBride and Semel (who also
would receive a $200,000 retention amount at such time for his six-month
transition period), or as retention payments over a two year period in the
case of Mr. Fiore. See "The Merger - Interests of Ascential Executive Officers
and Directors in the Merger."
Opinion of Ascential's Financial Advisor
As disclosed in the proxy statement on pages 27-28, in connection with its
discounted cash flow analysis, Deutsche Bank reviewed selected analyst reports
for projected cash flows for 2005 and 2006 and certain information provided by
Ascential's management for estimated projected cash flows for 2007-2014.
Deutsche Bank used the following cash flow numbers for Ascential for the years
2005 through 2014, respectively, $26 million, $45 million, $51 million, $56
million, $62 million, $68 million, $70 million, $75 million, $81 million and
$88 million. The cash flow amounts for 2005 and 2006 were estimated by
Deutsche Bank based on a C.E. Unterberg, Tobin analyst report dated February
9, 2005 that was substantially similar to and more detailed in some respects
than management's estimates, which had been prepared for internal use, for
these periods. The C.E. Unterberg, Tobin analyst report used by Deutsche Bank
was also in line with then-current consensus estimates. Such information from
C.E. Unterberg, Tobin or similar sources was unavailable for future periods
and the cash flow amounts for 2007-2014 were derived from management's
estimated projections. Ascential does not, as a matter of course, publicly
disclose long-term estimates and those provided to Deutsche Bank for the
purpose of its discounted cash flow analysis were not prepared with a view to
public disclosure or compliance with the published guidelines of the SEC
regarding projections, nor were they prepared in accordance with generally
accepted accounting principles. These long-term projected cash flow estimates
were derived from financial projections prepared by Ascential management
consistent with its historical development of budgets and long-range operating
projections for internal use and not developed for public disclosure. Although
these estimates present numerical specificity, they reflect numerous
assumptions, including assumptions regarding development activities, and
estimates made by management, that management thought were reasonable at the
time they were made. Failure to achieve any such assumptions would impact the
accuracy of the projections. Additionally, factors such as industry
performance and general business, economic, regulatory, market and financial
conditions, all of which are extremely difficult to predict and beyond the
control of management, may cause the projected estimates and management's
assumptions to be inaccurate. See "Forward Looking Statements" in the proxy
statement for additional information.
Additionally, Deutsche Bank calculated the weighted average cost of capital of
Ascential used in the discounted cash flow analysis based on its analysis of
the "predicted beta" from Barra, Inc. for certain selected companies and the
"equity market risk premium" from Ibbotson Associates.
In connection with its analysis of selected publicly traded companies and
analysis of selected precedent transactions, Deutsche Bank used the metric of
tax-effected EBIT. Deutsche Bank used tax-effected EBIT in order to take into
account Ascential's relatively large cash balance and related earnings from
interest, as compared to the other companies used in the Deutsche Bank
analyses, as adjusted to reflect such earnings excluding interest on an
after-tax basis. As set forth on page 25 of the proxy statement, tax-effected
EBIT is arrived at by multiplying a company's EBIT (which is defined in the
proxy statement as operating earnings before interest and tax, excluding
certain non cash and / or non-recurring charges) by one minus each company's
effective tax rate for the period, which was derived from such company's
financial statements or analyst reports, as applicable.
In connection with its analysis of selected precedent transactions set forth
on pages 26 and 27 of the proxy statement, Deutsche Bank also calculated
premiums to Equity Value paid in the listed recent software transactions.
Plaintiff's counsel have calculated the implied share price of Ascential
common stock based on the median premiums to Equity Value Deutsche Bank
calculated for the listed transactions one day (28.7%) and 30 days (51.7%)
prior to announcement of the transactions. The range of values for Ascential
common stock derived based on the median premiums for the listed transactions
is $20.21 to $21.71 per share, and the plaintiff's counsel have demanded that
the range be disclosed. Deutsche Bank's analysis of premiums paid is discussed
at page 27 of the proxy statement. Deutsche Bank did not consider the premiums
calculated for listed transactions to be meaningful to its fairness analyses
because (i) it entailed comparing the IBM cash transaction with transactions
that involved cash, stock or a combination of both and (ii) because an
analysis of all cash transactions since 2003 with consideration of $1 billion
or greater, in its judgment, provides a better comparison. You should read the
full text of the written opinion of Deutsche Bank, dated March 13, 2005, set
forth in the notice of special meeting and accompanying proxy statement mailed
to stockholders on or about April 1, 2005, in its entirety for a description
of the procedures followed, assumptions and qualifications made, matters
considered, and limitations of the review undertaken, by Deutsche Bank.
Deutsche Bank believes that its fairness analyses must be considered as a
whole and that considering any portion of such analyses and of the factors
considered without considering all analyses and factors could create a
misleading view of the process underlying the opinion.
As discussed in the proxy statement on pages 20 and 28, we began working with
Deutsche Bank in May 2004 regarding possible transactions and entered into an
engagement letter with Deutsche Bank on February 15, 2005 pursuant to which
Deutsche Bank will be entitled to a cash fee of approximately $8 million, a
substantial portion of which is based on a percentage of the transaction value
and is accordingly contingent on consummation of the merger, as well as
reimbursement of certain fees and expenses. During this and prior periods, we
worked with additional investment bankers in connection with our review of
possible strategic alternatives. Deutsche Bank is not entitled to any fee from
IBM in connection with this transaction, but members of the DB Group have from
time to time provided, and may continue to provide investment banking,
commercial banking (including extensions of credit), financial advisory,
underwriting and other financial services to us, IBM or our respective
affiliates. During 2004 Deutsche Bank received approximately $2.8 million from
IBM for such financial services.
REVOKING OR CHANGING YOUR VOTE
Shares Registered in Your Name. Any proxy you give pursuant to this
solicitation may be revoked by you at any time before it is voted. Proxies may
be revoked by one of three ways:
o You may deliver to the Secretary of Ascential at or before the
taking of the vote at the special meeting a written notice bearing a
date later than the proxy stating that you would like to revoke your
proxy.
o You may duly complete, execute and deliver to the Secretary of
Ascential at or before the taking of the vote at the special meeting
a later-dated new proxy card for the same shares. If you submitted
the proxy you are seeking to revoke over the Internet or
telephonically, you may submit this later-dated new proxy using the
same method of transmission (Internet or telephonic) as the proxy
being revoked provided the new proxy is received by 11:59 p.m.
Eastern Standard Time on April 28, 2005.
o You may attend the special meeting and vote in person (although
attendance at the special meeting will not in and of itself
constitute a revocation of a proxy).
Any written notice of revocation or subsequent proxy should be delivered
to Ascential Software Corporation at 50 Washington Street, Westborough,
Massachusetts 01581, Attention: Secretary, or hand-delivered to our Secretary
at or before the taking of the vote at the special meeting.
Shares Held in Street Name. If you have instructed a broker or bank to
vote your shares, you must follow directions received from your broker or bank
to change those instructions.
The Board of Directors continues to unanimously recommend that you vote "FOR"
the proposal to adopt the merger agreement and "FOR" the proposal to adjourn
the special meeting, if necessary or appropriate, to solicit additional votes.
ADDITIONAL INFORMATION
If you would like additional copies, without charge, of this proxy statement
supplement or of the original proxy statement, or if you have questions about
the merger, including the procedures for voting your shares, you should
contact:
Ascential Software Corporation
Attn: Investor Relations
50 Washington Street
Westborough, Massachusetts 01581
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Shareholders, call toll free: (877) 687-1873
Banks and Brokers, call collect: (212) 750-5833
Neither the Securities and Exchange Commission, or the SEC, nor any state
securities regulatory agency has approved or disapproved the merger, passed
upon the merits or fairness of the merger or passed upon the adequacy or
accuracy of the disclosures in this proxy statement. Any representation to the
contrary is a criminal offense.
REMEMBER:
You may be able to vote by telephone, or via the Internet.
Please follow the easy instructions on the enclosed proxy card.
If you have any questions, or need assistance in voting
your shares, please call our proxy solicitor,
INNISFREE M&A INCORPORATED
TOLL-FREE, at (877) 687-1873.
ASCENTIAL SOFTWARE CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF STOCKHOLDERS
FRIDAY, APRIL 29, 2005
The undersigned hereby appoints Peter Gyenes, Robert C. McBride and
Scott N. Semel, and each of them singly, as attorneys of the undersigned, with
full power of substitution (the "Proxy Holders"), to vote all shares of stock
which the undersigned is entitled to vote at the Special Meeting of
Stockholders of Ascential Software Corporation to be held at the Omni Parker
House Hotel, Stowe Room, 60 School Street, Boston, Massachusetts 02108 on
Friday, April 29, 2005 at 10:00 a.m., local time, and at any adjournment or
postponement thereof, with all the powers which the undersigned might have if
personally present at the meeting.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting of Stockholders and Proxy Statement, dated April 1, 2005, and hereby
expressly revokes any and all proxies heretofore given or executed by the
undersigned with respect to the shares of stock represented by this Proxy and
by filing this Proxy with the Secretary of the Company, gives notice of such
revocation.
THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE TIME IT IS VOTED.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE OR VIA THE INTERNET OR TELEPHONE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
See Reverse Side See Reverse Side
________________________________________________________________________________
[Reverse of Proxy]
ASCENTIAL SOFTWARE CORPORATION
C/O EQUISERVE TRUST COMPANY, N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
Your vote is important. Please vote immediately.
Vote-by-Internet Vote-by-Telephone
Log on to the Internet and go to Call toll-free
http://www.eproxyvote.com/ascl OR 1-877-PRX-VOTE (1-877-779-8683)
If you vote over the Internet or by telephone, please do not mail your card.
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
Please mark
votes as in
|X| this example.
This proxy will be voted as directed or, if properly executed and no direction
is indicated, will be voted "FOR" the proposal to adopt the Agreement and Plan
of Merger and "FOR" the proposal to adjourn the special meeting to a later
date and, if necessary or appropriate, to solicit additional proxies if there
are not sufficient votes in favor of the proposal to adopt the Agreement and
Plan of Merger.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING:
1. The proposal to adopt the Agreement and Plan of Merger, dated as of March
13, 2005, among International Business Machines Corporation, a New York
corporation, Ironbridge Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of IBM, and Ascential Software Corporation.
FOR AGAINST ABSTAIN
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2. The proposal to adjourn the special meeting to a later date and, if
necessary or appropriate, to solicit additional proxies if there are not
sufficient votes in favor of proposal number 1.
FOR AGAINST ABSTAIN
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In their discretion, the Proxy Holders are authorized to vote upon such other
matter(s) which may properly come before the special meeting and any
adjournment(s) or postponements thereof.
|_| Mark here for address change and note at left.
Please date and sign exactly as your name or names appear hereon. Corporate or
partnership proxies should be signed in full corporate or partnership name by
an authorized person. Persons signing in a fiduciary capacity should indicate
their full titles in such capacity. If shares are held by joint tenants or as
community property, both should sign.
Signature: Date:
Signature: Date: