[Update1] Pervasive Software PVSW In Hostile Takeover. White Knight LOEB to the Non-Insider Shareholders Rescue
October 13, 2012
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[Update1] [Comments 1-27 inclusive] Pervasive Software PVSW In Hostile Takeover - Six Law Firms Already Investigating Board For Breach Of Fiduciary Duty.
On October 10th LOEB[1] CAPITAL MANAGEMENT filed SEC FORM 13-D which means LOEB owns greater than or equal to five (5%) percent of the outstanding shares of PVSW common stock 853,593 shares (5.16%). Incorporated within said filing was the below letter from LOEB to the Pervasive Board of Directors. Folks, this pretty much vindicates all allegations made on this blog against the PVSW Board of Directors. Class Action litigation is now imminent against the Board from non-insider shareholder(s), and again, damages will include but not be limited to all Directors options awarded cumulative retroactive to 1994 and will seek imprisonment for allegations previously cited.
August 28, 2012
Board of Directors
Pervasive Software Inc.
12365-B Riata Trace Parkway
Austin, Texas 78727
To the Board of Directors:
Loeb Arbitrage Management LP and Loeb Offshore Management LP, together doing business as Loeb Capital Management, and affiliated entities (collectively, “Loeb”) over which it has management discretion are owners of 544,264 shares of the common stock of Pervasive Software Inc. (“PVSW” or the “Company”) as of close of business on August 27, 2012. We are writing this letter to express our concern regarding both the vague language contained in yesterday’s press release from PVSW’s board of directors and the information which was excluded from the announcement. The Company’s disclosure that it has retained Shea & Company, LLC (“Shea”) “to assist and advise” in its evaluation of the proposal received from Actian Corporation (“Actian”) on August 13, 2012, “as well as the Company’s other strategic alternatives, including remaining independent and executing its existing strategic plans” is glaring in its omissions.
To be clear, we view the failure to announce the commencement of a formal process to maximize value for shareholders through a competitive auction process that focuses solely on selling the Company to the highest bidder as a failure to satisfy the fiduciary duty the PVSW board of directors owes to the shareholders of the Company. We acknowledge the retention of Shea; however, given that Shea is not a nationally recognized investment banking firm, shareholders are left to wonder whether the Company is indeed endeavoring to maximize value by selling the Company to the highest bidder. For that matter, the simple fact that the Company avoided mentioning maximizing shareholder value adds fuel to the fire of our concern, as we believe this to be atypical for such an announcement.
In yesterday’s press release, the Company refers to “remaining independent and executing its existing strategic plans” as one of its “other strategic alternatives.” This language is distressing to us as it is consistent with language often used by boards that are entrenched and actively engaged in behavior that is not conducive to maximizing value for shareholders. More troubling to us than the affirmative statements is the absence of a statement of commitment to maximizing value for shareholders. As we have previously discussed, the Actian proposal represents a stock price level that has not been exceeded (or even approached) in over 8 years. Quite simply, the growth of PVSW’s revenues and profits has been anemic and appears unlikely to change in a positive manner. It is our view that the only acceptable alternative involves the Company focusing solely on using the proposal from Actian as a catalyst to maximize value for PVSW shareholders and we are disappointed by the Company’s failure to explicitly state just such a commitment.
Given our concerns, we request a meeting with PVSW’s management team and board of directors as soon as possible but in no event later than September 6, 2012. It is imperative that this meeting occur well in advance of September 15, 2012. [emphasis added]
Thank you for reading this letter.
Sincerely,
Gideon King
President, Chief Investment Officer
LOEB CAPITAL MANAGEMENT
61 Broadway, 24 th Floor
New York, New York 10006
_______________________________________
Timeline
June 15 PVSW short position 23,758 shares
June 29 PVSW short position 559,704 shares
July 24 Pervasive announces Q4/FY 2012 Revenues/Earnings.
August 13 Actian Corp makes a public proposal to acquire Pervasive for $8.50/share Six law firms jump in between August 13 and August 16 to investigate the PVSW Board for Breach of Fiduciary Duty, in addition to whether the Pervasive Board of Directors is acting in shareholders’ best interests and whether the proposed consideration would be fair and adequate.
August 27 Pervasive announces retaining Shea & Company LLC "...to assist and advise the Board of Directors in its evaluation of an unsolicited, non-binding proposal the Company received from Actian Corporation on August 13, 2012, as well as the Company’s other strategic alternatives, including remaining independent and executing its existing strategic plans..."
August 28 LOEB Capital (13D shareholder) sends above letter to PVSW Board of Directors.
September 12 Pervasive announced "...that its Board of Directors has met to consider the advice of its independent financial advisor, Shea & Company, LLC, with respect to the evaluation of an unsolicited, non-binding proposal the company received from Actian Corporation on August 13, 2012. The Board of Directors has instructed Shea & Company to solicit potential bids from interested parties and engage with those parties, including Actian Corporation, regarding their interest in acquiring Pervasive Software..."
Footnotes
[1] LOEB CAPITAL MANAGEMENT Founded 1931 shortly after the onset of The Great Depression as Loeb, Rhoades & Co (1937-1979) Acquired by American Express in 1981.
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