- Dialectic asserts that the Company should not be sold having just recorded its first profitable quarter. This statement is misleading. In Q4 fiscal 2017 the Company reported Non-GAAP Net Income of $2.6 million. The majority of the Non-GAAP Net Income was the result of a one-time reversal of a bonus accrual that was accrued (and not awarded) in prior quarters due to poor performance in such quarters. The Company's quarterly EBITDA would have been about break even if the bonus accrual reversal was excluded.
- Dialectic asserts that the proposed merger consideration is inconsistent with the Company's inherent growth prospects. This statement is inaccurate and does not take into account that the Company has fallen short of its revenue targets and bookings objectives in each of the last four fiscal years, despite changes to market focus, product innovation and changes to company personnel, including the addition of three new members to the Board of the Company within the last year.
- Dialectic cites valuations that are based on unrealistic scenarios and ignore the market realities. An extensive sale process that saw more than 52 strategic and financial acquirers considering the acquisition of Covisint yielded a price that the market is willing to bear for the Company. The merger consideration of $2.45 per share approved by the Board after receiving bids from only four potential buyers, represents a premium of approximately: -- 23% to the closing price per share of the Company's common stock on June 2, 2017; -- 27% to the volume-weighted average trading price per share of the Company's common stock for the 30-day period ending on June 2, 2017; and -- 46% to the cash-adjusted price per share of the Company's common stock for the 30-day period ending on June 2, 2017 (the cash-adjusted calculation deducts the Company's cash and cash equivalents of $33 million, or $0.79 per share, as of March 31, 2017, from both its current share price and from the total value of the merger consideration in order to better measure the premium being offered).
The $2.45 per share all-cash merger consideration provides the Company's shareholders with certainty of value and immediate liquidity, while reducing the market and long-term business risks, including risks related to the Company's historical operating results and future growth prospects.
- Dialectic asserts that the Company resisted efforts by shareholders to improve the Company. This statement is just false. Within the last year, the Company appointed Messrs. John Smith, Andreas Mai and Jonathan Yaron as directors to the Company's Board as a result of negotiations with activist investors (including Dialectic). It is important to note that these new directors were involved throughout the strategic review process undertaken by the Company, and, with the other members of the Company's Board, unanimously voted in favor of the sale of the Company to Open Text. In addition to adding new board members, the Company and the Board made efforts to improve the Company throughout the year, including significantly reducing the Company's cost run-rate by $15 million, or nearly 20%, with the objective of cash flow breakeven in fiscal year 2018. However, there was little revenue growth obtained from those efforts.
- Dialectic asserts that a "maximum cash/go-it-alone" business plan would produce more value for shareholders. Dialectic offers this statement with no credible support. The Company's Board and senior executive management team discussed extensively numerous strategic options for the Company, including the strategy favored by Dialectic. However, the strategy proposed by Dialectic necessarily reduces investment in research and development in the Company's products to near zero, and existing customers would begin to look for alternative suppliers, making the top- and bottom-line of the "max cash" strategy wholly unrealistic for a publicly held company.
- Dialectic asserts that Open Text indicated that the acquisition of Covisint would be 2% accretive. Open Text made no such statement.
Covisint's upcoming Special Meeting is important in delivering the best outcome for our shareholders. Covisint shareholders of record as of the close of business on June 15, 2017 are entitled to vote at the Special Meeting.The Covisint Board's unanimous recommendation is that you vote "FOR" the Proposal to Approve the Sale of the Company to Open Text for $2.45 per share. We thank you for your continued support of Covisint and hope you will attend Tuesday's Special Meeting. Regards, /s/ John F. Smith John F. Smith, Chairman of the Board of Directors About Covisint Corporation Covisint is the connected company - we securely connect ecosystems of people, systems and things to enable new service offerings, optimize operations, develop new business models and ultimately enable the connected economy. Today, we support more than 2,000 organizations and connect to more than 212,000 business partners and customers worldwide. Learn more at www.covisint.com. Follow us:
Investor Relations Contact866-319-7659 email@example.comMedia ContactBrad Schechter, Vice President, Corporate Marketing248firstname.lastname@example.orgFor Sales and Marketing InformationCovisint Corporation, 26533 Evergreen Road, Suite 500, Southfield, MI 48076, 800-229-4125http://www.covisint.com