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Filed by VerticalNet, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14d-2
of the Securities Exchange Act of 1934
Subject Company: SierraCities.com Inc.
Commission File No. 0-22525
[VERTICALNET LOGO] [SIERRACITIES.COM INC. LOGO]
Investor Relations Contact: Investor & Media Relations Contact:
Muriel Lange, 215-315-3367 Thomas J. Depping, 713-229-6800
[email protected] [email protected]
Media Relations Contact:
Jessica Cassady, 215-315-3712
[email protected]
VERTICALNET TO ACQUIRE SIERRACITIES AND CREATE NEW
VERTICALNET CREDIT DIVISION
B2B ENABLER WILL PURCHASE LEADING BUSINESS CREDIT TECHNOLOGY SOLUTIONS COMPANY
FOR $133 MILLION IN STOCK
HORSHAM, PA and HOUSTON, TX - November 6, 2000 -- VerticalNet, Inc. (Nasdaq:
VERT), the Internet's leading business-to-business e-commerce enabler, announced
today that it has entered into an agreement to acquire SierraCities.com Inc.
(Nasdaq: BTOB), which offers one of the Internet's fastest and most
comprehensive business credit solutions, for $7.00 per SierraCities share, or an
aggregate of $133 million, payable in VerticalNet stock and subject to a collar
provision described below. The acquired business, which will operate as
VerticalNet Credit, will add the key functionality of enabling credit and
financing solutions to the B2B company's horizontal offerings across its 57
industry-specific online marketplaces and will be leveraged throughout its three
strategic business units: VerticalNet Markets, VerticalNet Solutions, and
VerticalNet Exchanges.
Since its founding in 1994, SierraCities has leveraged its proprietary
technology and the Internet to build a leading business in originating and
servicing small business equipment leases and term loans of principal amounts
less than $100,000. SierraCities' solution allows an applicant to apply online,
receive final approval in less than two minutes and receive funding in as little
as 24 hours. The company has processed more than 300,000 applications and
originated more than $3 billion of loans and leases. With more than 95,000
active business customers and an excellent credit quality track record,
SierraCities has strong core competencies in small business finance.
Through its experience in originating business credit, SierraCities has
developed a core competency in automating credit risk assessment of small to
medium sized businesses. Capitalizing on that core strength, SierraCities has
developed solutions that allow it to facilitate the extension of trade credit by
providing suppliers with real time credit scoring of their buyers. This
automated Web-based solution is faster, less expensive and more accurate in
terms of
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assessing credit risk than traditional offline methods. SierraCities gives
VerticalNet an ideal platform for providing Web-based credit solutions to its
target markets.
"Some of the barriers to conducting business online are assessing the
creditworthiness of your trading partners, establishing credit and financing
terms and providing a mechanism for payment," said VerticalNet's President and
CEO, Joe Galli. "This is why credit assessment, payment and financing services
are key elements of our strategy of providing a broad range of
business-to-business e-commerce enablement solutions to our customers.
SierraCities' product offerings will enhance the features and functionality of
VerticalNet's online marketplaces. These improved product offerings should drive
customer satisfaction and usage and result in higher and recurring e-commerce
revenue streams. VerticalNet has two types of customers - buyers and suppliers.
SierraCities' credit solutions will afford buyers the liquidity to make online
purchases and will allow suppliers to manage credit decisions more effectively."
"This merger will benefit our customers and shareholders," said SierraCities'
President and CEO, Thomas Depping. "We have a great deal of respect and
appreciation for VerticalNet's vision and commitment to success, all in a
corporate culture that fits well with ours. Together, we'll be able to leverage
one another's technologies and customer bases to create a business that is much
stronger than what either of us has on a stand-alone basis. With VerticalNet as
our partner, we are more confident than ever that we will capitalize on our
position as the Internet's leading provider of real time, comprehensive credit
solutions for small to medium sized businesses and will continue to grow our
vendor relationships."
VerticalNet will leverage and tightly integrate SierraCities' offerings
throughout its three business units by implementing the following:
o VerticalNet Markets expects to market trade credit services as
well as financing solutions throughout its 57 online
marketplaces. Furthermore, VerticalNet Markets will make
available the SierraCities solutions to its business partners.
In addition, VerticalNet will market its e-commerce enablement
services to SierraCities' customer base and vendor network.
o VerticalNet Solutions plans to integrate SierraCities'
business credit offering into its solutions stack, increasing
the division's e-commerce enablement capabilities.
o VerticalNet Exchange intends to use SierraCities' credit
decisioning tools to qualify the market participants of NECX
and future exchanges.
"We expect that the SierraCities acquisition will be accretive to VerticalNet's
2001 cash earnings and 2001 revenues on a per share basis," said VerticalNet's
Executive Vice President and CFO, Gene S. Godick. "In addition, we believe that
we can realize synergies from this acquisition and expect that it will
strengthen our cash position."
Godick continued, "We are confident that we will be able to integrate
SierraCities effectively. As a condition to closing, SierraCities will move
substantially all of its loan and lease portfolio off balance sheet. We also
plan to rearrange SierraCities' funding strategy so as to minimize the size of
the balance sheet associated with the SierraCities business and to significantly
reduce our exposure to credit risk. Currently, SierraCities funds loans and
leases with equity, then moves
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them into a warehouse facility provided by one of its credit sources and from
time to time effects a securitization of these assets. Going forward,
VerticalNet intends to establish flow arrangements with selected financial
institution partners pursuant to which loans and leases will be originated by
SierraCities and immediately sold for a fee to flow partners. Given
SierraCities' excellent credit history, we are confident that we will be able to
arrange flow agreements with financial institution partners on a timely basis."
The transaction will take the form of an exchange offer in which VerticalNet
will offer to exchange VerticalNet shares with a value of $7.00 for each
SierraCities share, subject to a collar. The number of VerticalNet shares to be
delivered will be based on the average closing price of VerticalNet's stock over
the ten trading days ending two days before the closing of the offer. The collar
functions as follows: if the average price is (1) less than $21, the
SierraCities shareholders shall receive 0.3333 shares for each SierraCities
share, (2) between $21 and $35, SierraCities shareholders shall receive a number
of VerticalNet shares equal to $7.00 divided by the average price, (3) between
$35 and $51, the SierraCities shareholders shall receive 0.2 VerticalNet shares
for each SierraCities share, and (4) greater than $51, the exchange ratio shall
be $10.20 divided by the average price. SierraCities will have the right to
terminate the merger agreement if the average price is less than $15. The
exchange offer will be followed by a merger in which VerticalNet stock will be
issued at the same exchange ratio paid in the exchange offer.
The offer is subject to the tender of two-thirds of the outstanding SierraCities
shares and other customary conditions. Holders of approximately 20% of the
outstanding SierraCities shares have agreed to tender their shares into the
exchange offer. The parties have agreed to commence the offer no later than
November 17. The parties hope to close the transaction by the end of the year.
The transaction will be accounted for using the purchase method and is expected
to be tax-free to SierraCities stockholders.
ABOUT VERTICALNET, INC.
VerticalNet, Inc. (www.verticalnet.com) provides end-to-end e-commerce solutions
targeted at distinct business segments through three strategic business units:
VerticalNet Markets includes 57 industry-specific web sites designed as online
vertical trading communities and provides hosted e-commerce and community
capabilities for corporate divisions and mid-size businesses; VerticalNet
Exchanges focuses on direct material open and spot markets; VerticalNet
Solutions builds digital marketplaces for global 2000 customers, consortia and
neutral Net market makers. VerticalNet International leverages the Company's
three strategic business units to create global Internet B2B marketplaces,
offering products and services internationally and partnering with companies
that have strong local presence and domain expertise.
ABOUT SIERRACITIES.COM INC.
SierraCities is an innovator of technology solutions for online
business-to-business financing. The Company's technology platform supports real
time funding of e-commerce transactions through one of the most comprehensive
online business financing fulfillment solutions available. SierraCities' credit
technologies enable B2B e-commerce by empowering businesses to complete
transactions more quickly, thereby gaining time and cost efficiencies.
SierraCities' infrastructure solution automates much of the process involved in
customer acquisition, application, data retrieval, data warehousing,
underwriting, documentation, servicing, collections, funding, auditing, and data
mining. For more information, please visit our Web site at www.SierraCities.com.
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SAFE HARBOR
This announcement contains forward-looking statements that involve risks and
uncertainties, including those relating to (i) the completion of the exchange
offer and merger; (ii) the benefits expected from the transaction, including the
expectation that the transaction will be accretive to VerticalNet's cash
earnings and revenues; (iii) the integration of SierraCities' operations into
VerticalNet's operations, including VerticalNet's ability to arrange flow
relationships with financial institutions; and (iv) statements that are preceded
by, followed by or include the words "will," "believes," "plans," "intends,"
"expects," "anticipates," "hope," "potential," or similar expressions. For such
statements, VerticalNet and SierraCities claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. There can be no assurances that future results will be
achieved, and actual results could differ materially from forecasts and
estimates. Important factors that could cause actual results to differ
materially include: the emergence of new competitive initiatives resulting from
rapid technological advances or changes in pricing in the market; the risks
associated with new product introductions, as well as the uncertainty of
customer acceptance of new or enhanced products from either VerticalNet,
SierraCities or their competition; risks associated with the entry into new
internet markets; the risks associated with integrating newly acquired
businesses and technologies; delays in product delivery; business conditions in
the business-to-business industry e-commerce industry; uncertainty and
volatility associated with Internet and eBusiness related activities; and other
risks described in their respective filings with the Securities and Exchange
Commission. Neither VerticalNet nor SierraCities assumes any obligation to
publicly update or revise any of the forward-looking statements that may be in
this announcement.
VerticalNet and NECX.com are registered trademarks and/or trademarks of Vert
Tech LLC in the United States and/or other countries. All other trademarks and
tradenames appearing in this announcement are the property of their respective
owners.
We urge investors and security holders to read the following documents, when
they become available, regarding the exchange offer and the merger (described
above), because they will contain important information:
- VerticalNet's preliminary prospectus, prospectus supplements, final
prospectus, and tender offer materials.
- VerticalNet's Registration Statement on Form S-4 and Schedule TO containing or
incorporating by reference such documents and other information.
- SierraCities' Solicitation/Recommendation Statement on Schedule 14D-9.
These documents and amendments to these documents will be filed with the United
States Securities and Exchange Commission.
When these and other documents are filed with the SEC, they may be obtained free
at the SEC's web site at www.sec.gov. You may also obtain for free each of these
documents (when available) from VerticalNet by directing your request to
Investor Relations at [email protected] / www.verticalnet.com or by fax at
215-784-1960, or from SierraCities by directing your request to Investor & Media
Relations at [email protected]/ www.sierracities.com/ or by fax at
713-221-1818.
