Primus Knowledge Solutions (NASDAQ:PKSI)
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Mitchell-Wright Technology Group Reiterates Reasons to Vote
Against Art Technology Group, Inc.'s Proposed Merger with Primus Knowledge
Solutions, Inc.
CINCINNATI, Oct. 12 /PRNewswire/ -- Mitchell-Wright Technology Group, LLC
("MWTG") today underscored the risks associated with relying on the assumptions
outlined in the ISS proxy analysis of the proposed merger between Art
Technology Group, Inc. ("ARTG" or the "Company") (NASDAQ:ARTG) and Primus
Knowledge Solutions, Inc. ("Primus") (NASDAQ:PKSI).
Although MWTG generally agrees with ISS' approach in their analysis of the
transaction, MWTG disagrees with their conclusion. The fundamental difference
between ISS and MWTG analysis lies in the assumptions used to develop the
conclusions. ISS relies on management's forecasts of revenue growth and
estimates of operating cash flow to support their conclusions. MWTG, instead,
analyzed management's projections in the context of management's historical
performance, as well as, current performance trends exhibited by both ARTG and
Primus. A review of historical performance shows that ARTG management has
missed their guidance for three of the last four quarters and for the past two
full years. An examination of the current revenue trend shows that ARTG has
not posted two consecutive quarters of revenue growth in the last fifteen
quarters and that ARTG has experienced a revenue decline of almost 30% over the
past eight quarters. On a combined basis, the two companies have experienced
over a 40% decline in revenue during the previous ten quarters and have also
failed to produce two consecutive quarters of revenue growth during that
period.
As a result of the historical performance analysis, during discussions with the
Board, MWTG reviewed the Company's post-merger operating plan and requested the
Company commit to certain threshold criteria on cash, profitability and expense
management consistent with management's plan. The threshold criteria served as
indicators that the Primus merger would be accretive to ARTG operations. When
the Company rejected accountability to certain minimum thresholds tied to
management's own plan, MWTG questioned the Board and management's commitment to
their public statements and concluded that (i) the merger with Primus would not
be accretive and (ii) that the Board and management would again fail to enhance
shareholder value.
MWTG maintains its position that the Board and management has failed to do the
following:
1. Protect and grow cash by improving the operating performance beyond
what management has delivered over the past two years;
2. Align costs with realized revenues to achieve sustainable, profitable
operations;
3. Achieve forecasted revenue growth; and
4. Enhance ARTG shareholder value, after having lost more than 60% of the
stock's value in the last year, measured by the record date for the
vote on the merger.
The merger with Primus further harms shareholder value in the following ways:
1. Fails to protect cash. The true cash cost of the acquisition is likely
greater than what management has guided. MWTG has asked management to
address this issue publicly.
2. Fails to plan realistic revenue growth by promoting forecasted revenue
growth in excess of 4% per quarter; when neither company has been able
to put together consistent quarterly growth.
3. Adds unnecessary risk to the business.
4. Causes dilution to the ARTG shareholders in excess of the contribution
of the Primus business.
MWTG asks shareholders why they would rely on assumptions presented by a
management team that has consistently missed their guidance. In addition, MWTG
asks shareholders why they would trust a management team that would not commit
to minimum thresholds on cash, profitability and cost management that would
make the merger accretive to the business. Management proposes a plan that
fails to protect ARTG shareholders by proposing a dilutive transaction with a
failing business and by not taking the necessary steps to make the transaction
accretive to cash and earnings.
Profitable, independent operations with a profitable growth plan offers a
greater opportunity to enhance ARTG shareholder value and puts ARTG in a better
position to control its future strategic alternatives. MWTG will vote AGAINST
Art Technology's proposed merger with Primus, and MWTG urges you to 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. For more information, please
visit http://www.saveatg.com/.
Mitchell-Wright Technology 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 proxy
statement filed with the Securities and Exchange Commission on October 8, 2004.
Shareholders are advised to read the proxy statement and the other documents
related to the solicitation of proxies by Mitchell-Wright Technology Group, LLC
and the other participants because they contain important information. A copy
of the proxy statement is being mailed to shareholders and is currently
available at no charge on the Securities and Exchange Commission's website at
http://www.sec.gov/. In addition, you may also obtain a free copy of the proxy
statement by contacting Innisfree M&A Incorporated toll free at (888) 750-5834
(banks and brokers call collect at (212) 750-5833).
CONTACT:
Ellen Gonda
Brunswick Group
(212) 333-3810
DATASOURCE: Mitchell-Wright Technology Group, LLC
CONTACT: Ellen Gonda of Brunswick Group, +1-212-333-3810, for
Mitchell-Wright Technology Group, LLC
Web site: http://www.saveatg.com/