NEW YORK, Aug. 12, 2014 /PRNewswire/ -- Praesidium Investment Management Company, LLC ("Praesidium" or "we") on behalf of its clients, beneficially owns approximately 5.4 million shares of TIBCO Software Inc. ("TIBCO" or the "Company"), and today sent the following letter to TIBCO's Board of Directors. Praesidium has a long-term, multi-year investment horizon and frequently interacts with management teams and boards of directors to propose constructive strategic ideas.
August 12, 2014
Board of Directors
TIBCO Software Inc.
3307 Hillview Avenue
Palo Alto, CA 94304
Dear Members of the Board of Directors:
Thank you for your recent letter to Praesidium Investment Management Company, LLC ("Praesidium") stating that the Board of Directors (the "Board") will meet with us. As constructive, long-term shareholders we look forward to further providing our views and analysis to our Board representatives.
We were happy to read in the Wall Street Journal that TIBCO Software Inc. ("TIBCO" or the "Company") has started to reach out to potential acquirers. We support the Company's exploration of a potential sale as a way to maximize shareholder value. However, the article states that the talks are not part of a formal process and are being spearheaded by TIBCO's CEO, Vivek Ranadive. We strongly believe that a rigorous, formal process is required in order for the Board to make a fully informed decision in good faith regarding whether a sale, a stand-alone strategy or another alternative is in the best interests of the Company's shareholders. In order to avoid conflicts of interest, we think that it is imperative that the Board form a special committee of independent directors and that the special committee engage with an investment bank and legal advisors. A rigorous, independent sale process is the only way to provide directors with sufficient, unbiased information to make a decision on a possible sale transaction.
In 2011 Reuters reported that talks broke down with a potential strategic acquirer of TIBCO and Bloomberg later reported that "Chief Executive Officer Vivek Ranadive held out for a higher bid, telling the Board he could get the stock to the proposed price range without a takeover." We do not know the details of those discussions; however, we believe the special committee should include at least two members who were not on the Board when TIBCO apparently rejected those overtures. We believe David West, as the longest tenured Board member not included in those 2011 discussions, should head this special committee.
Praesidium has done an extensive analysis of TIBCO and its products and our work shows the Company has an excellent product set in some of the highest growth areas of software. Given the strategic importance of the rapidly growing data discovery market and Spotfire's leading technology in this area, combined with the high-quality technology portfolio that TIBCO possesses in the growing application infrastructure middleware marketplace, we believe that there would be a number of potential strategic acquirers for the Company, in both the software and hardware spaces. Further, we believe a strategic acquirer could pay a sizable premium to the current public market valuation and, after synergies, earn very high after-tax cash-on-cash returns on an acquisition.
We believe the Board has an opportunity to create a significant amount of value for shareholders through a formal and well run sales process. Praesidium, as a large, long-term TIBCO shareholder, would be more than willing to assist the special committee in pursuit of maximizing value for TIBCO shareholders. We intend to provide the Board our analysis and views on who we see as the potential strategic acquirers and how TIBCO's products would fit with each.
Praesidium Investment Management Company, LLC /s/ Kevin Oram /s/ Peter Uddo Kevin Oram Peter Uddo Managing Director Managing Director
SOURCE Praesidium Investment Management Company, LLC