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FILED BY 724 SOLUTIONS INC.
PURSUANT TO RULE 425 UNDER THE SECURITIES ACT OF 1933
SUBJECT COMPANY: TANTAU SOFTWARE, INC.
EXCHANGE ACT FILE NUMBER OF 724 SOLUTIONS INC.: 1-15641
[THE FOLLOWING LETTER WAS SENT BY 724 SOLUTIONS INC. TO THE REGISTERED HOLDERS
OF ITS COMMON SHARES ON DECEMBER 22, 2000]
[724 SOLUTIONS INC. LETTERHEAD]
RE: 724 SOLUTIONS INC.'S ACQUISITION OF TANTAU SOFTWARE, INC.
Dear Shareholder,
724 Solutions Inc. ("724 SOLUTIONS") has entered into a definitive
agreement to acquire Tantau Software, Inc. ("TANTAU"), a privately-held U.S.
company and a global provider of software and professional services that
enable enterprises to conduct high-volume, secure, m-commerce transactions. I
am writing to you, a valued shareholder, to explain the details of the
transaction.
By combining 724 Solutions and Tantau, we are creating a leading
global provider of infrastructure and application software. This is a unique
opportunity to bring together two successful and complementary companies. The
new company will have an expanded geographic presence, an expanded set of
customers, strong infrastructure and application technology, and an
experienced management team. More significantly, however, with the
combination of the strategic relationships that each of 724 Solutions and
Tantau possess, the new combined company will be able to address a broader
market, which includes selling to new kinds of customers.
724 Solutions will issue to Tantau's equity holders 19 million
shares in total, including 724 Solutions' assumption of Tantau's employee
stock options. The transaction is currently valued at approximately US $423
million on a fully diluted basis, based on 724 Solutions' closing stock price
on Nasdaq on December 14, 2000. When the transaction is completed, 724
Solutions shareholders will own approximately 68 percent of the combined
company (to be called 724 Solutions) and Tantau shareholders will own
approximately 32 percent, on a fully diluted basis (based on the current
price of 724 Solutions' common shares).
In addition, the merger agreement permits Tantau to grant options
that meet specified criteria prior to closing. These options will also be
assumed by 724 Solutions and will include:
- Tantau stock options convertible into options to acquire a total of 1.5
million common shares of 724 Solutions, which will be issued to the
executive officers and certain other employees of Tantau immediately prior
to the merger; and
- options to acquire up to 500,000 shares of Tantau common stock (equivalent
to approximately 300,000 724 Solutions common shares) which may be issued
to newly hired employees and promoted employees prior to the merger.
The acquisition is subject to customary closing conditions,
including:
- filing with, and declaration of effectiveness by, the Securities and
Exchange Commission of the Form F-4 Registration Statement which will
register the common shares to be issued in the transaction under the U.S.
Securities Act of 1933, as amended;
- expiry of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act; and
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- approval for the listing of the issued shares on The Toronto Stock Exchange
and The Nasdaq Stock Market.
At this time, the Form F-4 Registration Statement is expected to be initially
filed in December 2000. With respect to the Hart-Scott-Rodino Antitrust
Improvements Act waiting period, early termination was granted by the Federal
Trade Commission on December 20, 2000. Finally, the stock exchange approvals
have been obtained, subject to the satisfaction of typical documentary
requirements. The transaction is expected to close in the first quarter of 2001.
I will continue to serve as chairman of the company and John Sims,
Tantau's president and chief executive officer, will assume the role of chief
executive officer of 724 Solutions. Karen Basian, chief financial officer of
724 Solutions, will continue in her current position. As well, Harald Sammer
of Tantau will be appointed as the chief technology officer. Finally, the 724
Solutions Board of Directors will expand to 13 members, including John Sims
and three other Tantau appointees.
Generally speaking, the rules and policies of The Toronto Stock
Exchange and The Nasdaq Stock Market would require 724 Solutions to hold a
shareholders' meeting in order to obtain shareholder approval for the Tantau
acquisition. However, 724 Solutions has satisfied these policies by obtaining
statements of support for the transaction from its six largest shareholders,
who, through their combined shareholding of approximately 67 per cent of the
shares of 724 Solutions, could determine the outcome of a shareholder vote.
As a result of this level of shareholder support, the considerable time and
expense of holding a shareholders' meeting can be avoided and we can proceed
to integrate the Tantau and 724 Solutions businesses on an accelerated
timeframe.
For further information regarding this transaction, visit our Web
site (www.724.com) or contact our investor relations group at 416-228-2369.
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Yours truly,
/s/ Gregory Wolfond
Gregory Wolfond
Chairman and Chief Executive Officer
