UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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|_| Preliminary Proxy Statement
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|_| Definitive Proxy Statement
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|X| Soliciting Material Under Rule 14a-12
PHOENIX TECHNOLOGIES LTD.
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(Name of Registrant as Specified in Its Charter)
STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD.
PARCHE, LLC
ADMIRAL ADVISORS, LLC
RAMIUS CAPITAL GROUP, L.L.C.
C4S & CO., L.L.C.
PETER A. COHEN
MORGAN B. STARK
JEFFREY M. SOLOMON
THOMAS W. STRAUSS
JOHN MUTCH
PHILIP MOYER
JEFFREY C. SMITH
--------------------------------------------------------------------------------
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PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM
DISPLAYS A CURRENTLY VALID OMB CONTROL NUMBER.
2
Starboard Value and Opportunity Master Fund Ltd., an affiliate of Ramius
Capital Group, L.L.C. ("Ramius Capital"), together with the other participants
named herein, has made a preliminary filing with the Securities and Exchange
Commission ("SEC") of a proxy statement and an accompanying proxy card to be
used to solicit votes for the election of its two nominees at the 2007 annual
meeting of stockholders of Phoenix Technologies Ltd., a Delaware corporation
(the "Company").
Item 1: On January 16, 2007, Admiral Advisors, LLC delivered the following
letter to the Board of Directors of the Company:
ADMIRAL ADVISORS, LLC LETTERHEAD
January 16, 2007
Board of Directors
Phoenix Technologies Ltd.
915 Murphy Ranch Road
Milpitas, CA 95035
Dear Board Members,
As you know, Admiral Advisors, LLC, a subsidiary of Ramius Capital Group,
L.L.C. (together, "Ramius"), remains seriously committed to purchasing the
outstanding capital stock of Phoenix Technologies Ltd. ("Phoenix" or the
"Company"). Therefore, we are resubmitting our revised offer to purchase for
$5.25 per share, in cash, all of the outstanding shares of Phoenix that we do
not already own. We have structured our offer to promptly bring value and
liquidity to all of the Company's shareholders on the terms and conditions set
forth below.
While we respect Woody, his new team, and the hardworking employees of the
Company, we believe Phoenix faces a difficult and risky operational turnaround.
We believe that Phoenix should not attempt this turnaround as a public company.
History has shown that this board of directors (the "Board"), when faced with
the pressures of being a public company, has responded with poor business
decisions that have had disastrous consequences for Phoenix and its
stockholders. We believe our $5.25 all-cash offer for all of the outstanding
shares is in the best interest of the Company's shareholders.
In addition, we believe that Phoenix is too small to bear the costs and to
handle the demands associated with operating as a public company. The market
demands that public companies demonstrate revenue growth, and we believe that
this expectation will pressure the Company to gain scale - potentially through
acquisitions - and to drive top-line growth. Phoenix's Board has already shown
its susceptibility to these pressures, as evidenced by its willingness to allow
management to diversify into an enterprise software business, organically build
the enterprise sales channel, and sell products on a fully paid-up license
basis. These decisions temporarily increased revenue, but proved to be major
mistakes ultimately damaging the core business and resulting in significant
destruction of shareholder value.
1
Executing a turnaround is difficult. Executing a turnaround in the public
spotlight is even more challenging. In a public turnaround, management will
disclose elements of its strategic plan, which, we believe will likely put the
Company at a competitive disadvantage and possibly interfere with its
effectiveness.
Ramius is the Company's largest shareholder. Given the Company's poor
track record, we believe that this Board should not be trusted to evaluate
acquisition opportunities, growth investments, and product expansions while
overseeing a turnaround plan in the public spotlight. We are committed to our
$5.25 all-cash offer and are ready, willing and able to immediately enter into
negotiations for a definitive acquisition agreement. The shareholders deserve to
receive a full and fair price for their shares now.
Our $5.25 all-cash offer is full and fair and represents a premium of
approximately 13.4% over the January 12, 2007 closing price of $4.63 per share,
and a premium of approximately 31.3% over the June 22, 2006 closing price of
$4.00, which was the closing price of the stock the day after the Company
announced the shift in its Core System Software pricing strategy. Given the
Board's refusal, to date, to negotiate with us in good faith, we have decided to
disclose our offer publicly and to proceed with our plans to elect an alternate
slate of board members at the Company's annual meeting of stockholders. While we
believe it would be in everyone's best interest to expeditiously complete this
transaction on a friendly basis, our candidates, subject to their fiduciary
duties, are committed to facilitating the negotiation of a mutually beneficial
transaction. We also reserve the right to make an offer directly to the
Company's shareholders if this Board continues to ignore the best interests of
its shareholders.
TRANSACTION TERMS
Based upon our review of the materials made available, Admiral Advisors,
LLC, a subsidiary of Ramius Capital Group, L.L.C. proposes, through a merger
with an appropriate newly formed acquisition entity (the "Purchaser"), to
acquire the Company (the "Transaction") on the following terms:
1. PURCHASE PRICE: $5.25 PER SHARE IN CASH.
2. CLOSING CONDITIONS: The Transaction is subject to the following limited
conditions:
(a) approval by the board of directors of the Company and
stockholders pursuant to the requirements of applicable law;
(b) receipt of any material governmental and third party approvals
(including expiration of all applicable waiting periods under
Hart-Scott Rodino, to the extent required);
2
(c) completion of customary confirmatory business, accounting,
financial, environmental and legal due diligence;
(d) the waiver of any Company anti-takeover provisions including
redemption of the Company's shareholder rights plan and waiver
of Delaware General Corporate Law Section 203; and
(e) the negotiation and execution of a mutually satisfactory
definitive merger agreement and the receipt of disclosure
schedules related thereto in a form reasonably acceptable to
us.
3. FUNDING SOURCES: The Purchaser has sufficient committed capital to finance
the Transaction. The Transaction is not subject to financing.
4. TIMING: The Purchaser is committed to allocating a sufficient amount of
resources and is confident that it will be able to close the Transaction
on an expedited basis. We require no external approvals.
5. CONDUCT OF BUSINESS: We expect that the Company will continue to operate
in the ordinary course of business and consistent with past practices and
that there will be no material adverse change to the Company's financial
condition or results of operation.
6. DUE DILIGENCE: The proposed Transaction is subject to completion to our
satisfaction of customary confirmatory business, accounting, financial,
environmental, and legal due diligence. With the full cooperation of the
Company and based upon information known to us, we would expect to
complete this process in no more than four weeks, if not earlier. Our
required due diligence will be limited to confirmation of information
generally known to us on the assumption that there is no material and
adverse information that the Company has not publicly disclosed.
7. NON-BINDING STATEMENT OF INTENT: This proposal is a statement of intention
only. A legally binding obligation with respect to the proposed
Transaction will arise only upon execution and delivery of definitive
agreements (acceptable to the Company and us), and then only on the terms
and conditions contained therein. We are committed to immediately
negotiating and executing a definitive merger agreement.
8. MANAGEMENT: We are receptive to discussions with senior management about
their future involvement in the business. We intend to speak with senior
management regarding their participation in this Transaction, and would
encourage and welcome their participation, although their participation is
not a condition to closing the Transaction. We are committed to preserving
the relationship of the Company with its employees.
3
We look forward to working with you to successfully and expeditiously
complete this transaction.
Very truly yours,
/s/ Jeffrey C. Smith
Jeffrey C. Smith
Executive Managing Director
Item 2: On January 16, 2007, Ramius Capital issued the following press
release:
RAMIUS CAPITAL SUBMITS REVISED OFFER TO ACQUIRE OUTSTANDING SHARES OF
PHOENIX TECHNOLOGIES FOR $5.25 IN CASH
FILES PRELIMINARY PROXY MATERIALS SEEKING TO ELECT ALTERNATE SLATE OF CANDIDATES
TO PHOENIX BOARD OF DIRECTORS
NEW YORK - JANUARY 16, 2007 - Admiral Advisors, LLC, a subsidiary of Ramius
Capital Group, L.L.C. (together, "Ramius") today announced that it has submitted
a revised offer to acquire for $5.25, in cash, all of the outstanding shares of
Phoenix Technologies Ltd. ("Phoenix" or the "Company") (NASDAQ: PTEC) that it
does not already own.
In a letter delivered to Phoenix's Board of Directors and filed with the U.S.
Securities and Exchange Commission ("SEC") in an amendment to its Schedule 13D,
Ramius, Phoenix's largest shareholder, stated that it remains seriously
committed to purchasing the outstanding capital stock of Phoenix and that
Phoenix shareholders will benefit from an immediate all-cash transaction that
offers an attractive premium.
Ramius Executive Managing Director Jeffrey C. Smith, stated in the letter:
"While we respect Woody, his new team, and the hardworking employees of the
Company, we believe Phoenix faces a difficult and risky operational turnaround.
We believe that Phoenix should not attempt this turnaround as a public company.
History has shown that this board of directors (the "Board"), when faced with
the pressures of being a public company, has responded with poor business
decisions that have had disastrous consequences for Phoenix and its
stockholders."
Smith continued, "Given the Company's poor track record, we believe that this
Board should not be trusted to evaluate acquisition opportunities, growth
investments, and product expansions while overseeing a turnaround plan in the
public spotlight."
The non-binding offer is not subject to financing, but is subject to a number of
other conditions including the completion of due diligence, and represents a
13.4% premium to Phoenix's closing share price on January 12, 2007.
In addition, Starboard Value and Opportunity Master Fund Ltd., an affiliate of
Ramius, today filed preliminary proxy materials with the SEC seeking to elect an
alternate slate of candidates to the Board of Directors of Phoenix. The nominees
identified in Starboard's preliminary proxy materials look to replace the two
current Class II directors whose terms will expire at the 2007 Annual Meeting of
Shareholders, which has been scheduled for February 14, 2007. Ramius stated that
the proposed nominees, John Mutch
4
and Philip Moyer, subject to their fiduciary duties, are committed to
facilitating the negotiation of a mutually beneficial transaction.
ABOUT RAMIUS CAPITAL GROUP, L.L.C.
Ramius Capital Group is a registered investment advisor that manages assets of
approximately $7.9 billion in a variety of alternative investment strategies.
Ramius Capital Group is headquartered in New York with offices located in
London, Tokyo, Hong Kong, Munich, and Vienna.
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
Starboard Value and Opportunity Master Fund Ltd., an affiliate of Ramius Capital
Group, L.L.C. ("Ramius Capital"), together with the other participants named
herein, has made a preliminary filing with the Securities and Exchange
Commission ("SEC") of a proxy statement and an accompanying proxy card to be
used to solicit votes for the election of its nominees at the 2007 annual
meeting of stockholders of Phoenix Technologies Ltd., a Delaware corporation
(the "Company").
RAMIUS CAPITAL ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ THE PROXY
STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO
CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE
PARTICIPANTS IN THE PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY
STATEMENT WITHOUT CHARGE UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO
THE PARTICIPANTS' PROXY SOLICITOR, INNISFREE M&A INCORPORATED, AT ITS TOLL-FREE
NUMBER: (877) 800-5185.
The participants in the proxy solicitation are Starboard Value and Opportunity
Master Fund Ltd., a Cayman Islands exempted company ("Starboard"), Parche, LLC,
a Delaware limited liability company ("Parche"), Admiral Advisors, LLC, a
Delaware limited liability company, Ramius Capital Group, L.L.C., a Delaware
limited liability company ("Ramius Capital"), C4S & Co., L.L.C., a Delaware
limited liability company ("C4S"), Peter A. Cohen, Morgan B. Stark, Thomas W.
Strauss, Jeffrey M. Solomon, John Mutch, Philip Moyer and Jeffrey C. Smith (the
"Participants").
Starboard beneficially owns 2,774,471 shares of Common Stock of the Company.
Parche beneficially owns 528,470 shares of Common Stock of the Company. As the
investment manager of Starboard and the managing member of Parche, Admiral
Advisors may be deemed to beneficially own the 2,774,471 shares of Common Stock
of the Company owned by Starboard and the 528,470 shares of Common Stock of the
Company owned by Parche. As the sole member of Admiral Advisors, Ramius Capital
may be deemed to beneficially own the 2,774,471 shares of Common Stock of the
Company owned by Starboard and the 528,470 shares of Common Stock of the Company
owned by Parche. As the managing member of Ramius Capital, C4S may be deemed to
beneficially own the 2,774,471 shares of Common Stock of the Company owned by
Starboard and the 528,470 shares of Common Stock of the Company owned by Parche.
As the managing members of C4S, each of Mr. Cohen, Mr. Stark, Mr. Strauss and
Mr. Solomon may be deemed to beneficially own the 2,774,471 shares of Common
Stock of the Company owned by Starboard and the 528,470 shares of Common Stock
of the Company owned by Parche.
Mr. Mutch beneficially owns 200,000 shares of Common Stock of the Company.
Mr. Moyer does not beneficially own any shares of Common Stock of the Company.
Mr. Smith does not beneficially own any shares of Common Stock of the Company.
# # #
5
CONTACT:
Media & Shareholders:
Sard Verbinnen & Co.
Dan Gagnier or Renee Soto, 212-687-8080
The full text of the letter follows:
January 16, 2007
Board of Directors
Phoenix Technologies Ltd.
915 Murphy Ranch Road
Milpitas, CA 95035
Dear Board Members,
As you know, Admiral Advisors, LLC, a subsidiary of Ramius Capital Group, L.L.C.
(together, "Ramius"), remains seriously committed to purchasing the outstanding
capital stock of Phoenix Technologies Ltd. ("Phoenix" or the "Company").
Therefore, we are resubmitting our revised offer to purchase for $5.25 per
share, in cash, all of the outstanding shares of Phoenix that we do not already
own. We have structured our offer to promptly bring value and liquidity to all
of the Company's shareholders on the terms and conditions set forth below.
While we respect Woody, his new team, and the hardworking employees of the
Company, we believe Phoenix faces a difficult and risky operational turnaround.
We believe that Phoenix should not attempt this turnaround as a public company.
History has shown that this board of directors (the "Board"), when faced with
the pressures of being a public company, has responded with poor business
decisions that have had disastrous consequences for Phoenix and its
stockholders. We believe our $5.25 all-cash offer for all of the outstanding
shares is in the best interest of the Company's shareholders.
In addition, we believe that Phoenix is too small to bear the costs and to
handle the demands associated with operating as a public company. The market
demands that public companies demonstrate revenue growth, and we believe that
this expectation will pressure the Company to gain scale - potentially through
acquisitions - and to drive top-line growth. Phoenix's Board has already shown
its susceptibility to these pressures, as evidenced by its willingness to allow
management to diversify into an enterprise software business, organically build
the enterprise sales channel, and sell products on a fully paid-up license
basis. These decisions temporarily increased revenue, but proved to be major
mistakes ultimately damaging the core business and resulting in significant
destruction of shareholder value.
Executing a turnaround is difficult. Executing a turnaround in the public
spotlight is even more challenging. In a public turnaround, management will
disclose elements of its strategic plan, which, we believe will likely put the
Company at a competitive disadvantage and possibly interfere with its
effectiveness.
6
Ramius is the Company's largest shareholder. Given the Company's poor track
record, we believe that this Board should not be trusted to evaluate acquisition
opportunities, growth investments, and product expansions while overseeing a
turnaround plan in the public spotlight.
We are committed to our $5.25 all-cash offer and are ready, willing and able to
immediately enter into negotiations for a definitive acquisition agreement. The
shareholders deserve to receive a full and fair price for their shares now.
Our $5.25 all-cash offer is full and fair and represents a premium of
approximately 13.4% over the January 12, 2007 closing price of $4.63 per share,
and a premium of approximately 31.3% over the June 22, 2006 closing price of
$4.00, which was the closing price of the stock the day after the Company
announced the shift in its Core System Software pricing strategy. Given the
Board's refusal, to date, to negotiate with us in good faith, we have decided to
disclose our offer publicly and to proceed with our plans to elect an alternate
slate of board members at the Company's annual meeting of stockholders. While we
believe it would be in everyone's best interest to expeditiously complete this
transaction on a friendly basis, our candidates, subject to their fiduciary
duties, are committed to facilitating the negotiation of a mutually beneficial
transaction. We also reserve the right to make an offer directly to the
Company's shareholders if this Board continues to ignore the best interests of
its shareholders.
TRANSACTION TERMS
Based upon our review of the materials made available, Admiral Advisors, LLC, a
subsidiary of Ramius Capital Group, L.L.C. proposes, through a merger with an
appropriate newly formed acquisition entity (the "Purchaser"), to acquire the
Company (the "Transaction") on the following terms:
1. PURCHASE PRICE: $5.25 PER SHARE IN CASH.
2. CLOSING CONDITIONS: The Transaction is subject to the following limited
conditions:
(a) approval by the board of directors of the Company and
stockholders pursuant to the requirements of applicable law;
(b) receipt of any material governmental and third party approvals
(including expiration of all applicable waiting periods under
Hart-Scott Rodino, to the extent required);
(c) completion of customary confirmatory business, accounting,
financial, environmental and legal due diligence;
(d) the waiver of any Company anti-takeover provisions including
redemption of the Company's shareholder rights plan and waiver
of Delaware General Corporate Law Section 203; and
(e) the negotiation and execution of a mutually satisfactory
definitive merger agreement and the receipt of disclosure
schedules related thereto in a form reasonably acceptable to
us.
3. FUNDING SOURCES: The Purchaser has sufficient committed capital to finance
the Transaction. The Transaction is not subject to financing.
7
4. TIMING: The Purchaser is committed to allocating a sufficient amount of
resources and is confident that it will be able to close the Transaction
on an expedited basis. We require no external approvals.
5. CONDUCT OF BUSINESS: We expect that the Company will continue to operate
in the ordinary course of business and consistent with past practices and
that there will be no material adverse change to the Company's financial
condition or results of operation.
6. DUE DILIGENCE: The proposed Transaction is subject to completion to our
satisfaction of customary confirmatory business, accounting, financial,
environmental, and legal due diligence. With the full cooperation of the
Company and based upon information known to us, we would expect to
complete this process in no more than four weeks, if not earlier. Our
required due diligence will be limited to confirmation of information
generally known to us on the assumption that there is no material and
adverse information that the Company has not publicly disclosed.
7. NON-BINDING STATEMENT OF INTENT: This proposal is a statement of intention
only. A legally binding obligation with respect to the proposed
Transaction will arise only upon execution and delivery of definitive
agreements (acceptable to the Company and us), and then only on the terms
and conditions contained therein. We are committed to immediately
negotiating and executing a definitive merger agreement.
8. MANAGEMENt: We are receptive to discussions with senior management about
their future involvement in the business. We intend to speak with senior
management regarding their participation in this Transaction, and would
encourage and welcome their participation, although their participation is
not a condition to closing the Transaction. We are committed to preserving
the relationship of the Company with its employees.
We look forward to working with you to successfully and expeditiously complete
this transaction.
Very truly yours,
/s/ Jeffrey C. Smith
--------------------------------
Jeffrey C. Smith
Executive Managing Director
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
Starboard Value and Opportunity Master Fund Ltd., an affiliate of Ramius Capital
Group, L.L.C. ("Ramius Capital"), together with the other participants named
herein, has made a preliminary filing with the Securities and Exchange
Commission ("SEC") of a proxy statement and an accompanying proxy card to be
used to solicit votes for the election of its nominees at the 2007 annual
meeting of stockholders of Phoenix Technologies Ltd., a Delaware corporation
(the "Company").
RAMIUS CAPITAL ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ THE PROXY
STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO
CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN
8
ADDITION, THE PARTICIPANTS IN THE PROXY SOLICITATION WILL PROVIDE COPIES OF THE
PROXY STATEMENT WITHOUT CHARGE UPON REQUEST. REQUESTS FOR COPIES SHOULD BE
DIRECTED TO THE PARTICIPANTS' PROXY SOLICITOR, INNISFREE M&A INCORPORATED, AT
ITS TOLL-FREE NUMBER: (877) 800-5185.
The participants in the proxy solicitation are Starboard Value and Opportunity
Master Fund Ltd., a Cayman Islands exempted company ("Starboard"), Parche, LLC,
a Delaware limited liability company ("Parche"), Admiral Advisors, LLC, a
Delaware limited liability company, Ramius Capital Group, L.L.C., a Delaware
limited liability company ("Ramius Capital"), C4S & Co., L.L.C., a Delaware
limited liability company ("C4S"), Peter A. Cohen, Morgan B. Stark, Thomas W.
Strauss, Jeffrey M. Solomon, John Mutch, Philip Moyer and Jeffrey C. Smith (the
"Participants").
Starboard beneficially owns 2,774,471 shares of Common Stock of the Company.
Parche beneficially owns 528,470 shares of Common Stock of the Company. As the
investment manager of Starboard and the managing member of Parche, Admiral
Advisors may be deemed to beneficially own the 2,774,471 shares of Common Stock
of the Company owned by Starboard and the 528,470 shares of Common Stock of the
Company owned by Parche. As the sole member of Admiral Advisors, Ramius Capital
may be deemed to beneficially own the 2,774,471 shares of Common Stock of the
Company owned by Starboard and the 528,470 shares of Common Stock of the Company
owned by Parche. As the managing member of Ramius Capital, C4S may be deemed to
beneficially own the 2,774,471 shares of Common Stock of the Company owned by
Starboard and the 528,470 shares of Common Stock of the Company owned by Parche.
As the managing members of C4S, each of Mr. Cohen, Mr. Stark, Mr. Strauss and
Mr. Solomon may be deemed to beneficially own the 2,774,471 shares of Common
Stock of the Company owned by Starboard and the 528,470 shares of Common Stock
of the Company owned by Parche.
Mr. Mutch beneficially owns 200,000 shares of Common Stock of the Company. Mr.
Moyer does not beneficially own any shares of Common Stock of the Company. Mr.
Smith does not beneficially own any shares of Common Stock of the Company.
9