LETTERHEAD
OF
MILBERG WEISS BERSHAD HYNES & LERACH LLP
May 31, 2000
Via Facsimile
Board of Directors of Shopko
Board of Directors of ProVantage
c/o Nancy Senate
FOLEY & LARDNER
150 East Gilman Street
Madison, WI 53701-1497
Board of Directors of Merck
c/o Gary P. Cooperstein
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
One New York Plaza
New York, NY 10004
Re: ProVantage Shareholder Litigation
Dear Board Members:
The Tender Offer Documents issued in connection with the sale of
ProVantage, Inc., including the SEC forms 14D-1 and 14-9 ("Documents") are false
and misleading in that they fail to disclose material information rendering such
documents false and misleading.
The Documents conceal material information relating to the motivations and
benefits which will be obtained by the Board Members of ProVantage and Shopko
upon consummation of the transaction. For example, the Documents fail to
disclose the fact that Shopko's 61% ownership interest in ProVantage is highly
illiquid. Though Shopko's ownership stake was no longer subject to the Rule 144
time restrictions, it was subject to the Rule 144 volume restrictions which, as
a practical matter, effectively precluded it from selling its interest in
ProVantage for years at anywhere near the price obtained in this transaction.
Unlike Shopko, our client and the other public stockholders of ProVantage were
not so disadvantaged as they have never faced the illiquidity issues faced by
Shopko.
<PAGE>
FOLEY & LARDNER
Board of Directors of Shopko
May 31, 2000
Page 2
The Documents also conceal the benefits that will be reaped by Girard,
Kramer, Wolf and Podany upon consummation of the Tender Offer by virtue of their
relationship with Shopko. Furthermore, the Documents conveniently omit from the
"Background" section that on February 29, 2000, one day after Merck submitted an
offer to purchase the company, ProVantage granted options to key officers which
have a post-exercise price value of $1,450,000.
The Documents are fraught with material omissions and misstatements. Merck
must refrain from purchasing ProVantage shares from ProVantage's shareholders in
the Tender Offer until it makes adequate disclosure of all material information
to ProVantage shareholders. Plaintiffs' concerns with the Tender Offer documents
are many and given the defects in these materials, our client immediately
attempted to contact Nancy Senate, Shopko's and ProVantage's counsel, to apprise
her of the necessity of correcting these problems and/or refraining from
consummating the Tender Offer, as proposed. She has not responded. We view these
issues as extremely important.
The Tender Offer is scheduled to close on June 14, 2000. Accordingly, the
necessary corrections must be provided to ProVantage shareholders on or before
June 5, 2000. If we do not hear from you on or before Thursday, June 1, 2000, we
will arrange to take the necessary steps to protect ProVantage's public
stockholders.
Very truly yours,
/s/ Randall H. Steinmeyer
RANDALL H. STEINMEYER
