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EXHIBIT 99.5
LOGO
, 2000
To Our Stockholders:
You are cordially invited to attend a special meeting of stockholders of
Seagate Technology, Inc. to be held on , 2000 at 9:00 a.m., Pacific
Time, at located at
.
Seagate, VERITAS Software Corporation and Suez Acquisition Company (Cayman)
Limited, a company formed by a group of private equity firms, are proposing to
engage in a three-party transaction involving the sale of Seagate's operating
assets to Suez Acquisition Company, followed by a merger between Seagate and a
subsidiary of VERITAS. Seagate's senior management team will also be
participating in the transactions through an equity investment in the entity
that will hold Seagate's operating assets following the leveraged buyout.
The transaction is very complex, and we have described it in greater detail
in the Joint Proxy Statement/Prospectus of Seagate and VERITAS included in this
mailing. The combined transaction involves:
- a cash sale to the private equity group of Seagate's operating assets
that will result in a net cash payment of approximately $1.235 billion
and the assumption by the private equity group of substantially all of
Seagate's liabilities. The cash payment is subject to certain adjustments
and will be reduced by the value of equity converted by members of
Seagate management into equity in the entity that will own Seagate's
operating assets following the leveraged buyout. On a per share basis,
after giving effect to Seagate's current estimate of these adjustments,
and based on Seagate's estimated cash balance as of September 22, 2000,
the cash per share that will be available for payment to Seagate's
stockholders in the merger is approximately $6.79 per share; and
- a subsequent merger between Seagate and a subsidiary of VERITAS in which
Seagate's stockholders will collectively receive:
- 109,330,300 shares of VERITAS common stock;
- an additional number of shares of VERITAS common stock with a market
value determined shortly before the completion of the merger that is
intended to be approximately equal to a negotiated discount to the
market value of Seagate's ownership of Gadzoox Networks and Lernout &
Hauspie securities;
- approximately $6.79 in cash per Seagate share, less the amount of cash
VERITAS may elect to retain in the merger as discussed in the next
bullet point;
- if VERITAS elects to retain some of the estimated $6.79 in cash,
additional shares of VERITAS common stock with a market value determined
shortly before the completion of the merger that is intended to be
approximately equal to
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the amount of cash that VERITAS retains, up to a maximum of $750
million; and
- an interest in future cash proceeds attributable to tax refunds and tax
credits attributable to Seagate which may be received or utilized
following the completion of the combined transaction.
Based upon the market prices of VERITAS common stock and Seagate's
investment securities as of September 22, 2000, Seagate's estimated cash balance
as of September 22, 2000, the total number of fully-diluted outstanding shares
of Seagate common stock as of September 22, 2000 and after giving effect to all
currently estimated adjustments, Seagate's stockholders would receive:
- $6.79 per share in cash and $65.41 per share in VERITAS common stock if
VERITAS elects to retain no cash;
- $4.71 per share in cash and $67.49 per share in VERITAS common stock if
VERITAS elects to retain $500 million of cash and;
- $3.68 per share in cash and $68.52 per share in VERITAS common stock if
VERITAS elects to reduce the cash paid in connection with the merger by $750
million.
Please note that these amounts are only estimates and that the value of the
stock portion will vary daily based primarily on the value of VERITAS common
stock. The actual cash and share amounts will not be determined until shortly
before the completion of the merger.
A helpful way to understand the combined transaction is to categorize
Seagate's existing assets into five categories: operating assets; investment
securities; cash; VERITAS stock; and potential tax refunds and credits. In the
leveraged buyout, the private equity group will purchase Seagate's operating
assets, including $765 million of Seagate's cash, for a gross price of $2
billion. Because the buyout group is purchasing $765 of Seagate's cash, the net
cash payment in the leveraged buyout is approximately $1.235 billion (subject to
some adjustments). In the merger between Seagate and a VERITAS subsidiary,
Seagate's stockholders will receive shares of VERITAS common stock and cash with
a combined value that is intended to be approximately equivalent to the value of
Seagate's cash on hand (consisting of the net cash received by Seagate from the
sale of its operating assets to the private equity group, and any other cash on
hand, less an amount of cash required to repay or redeem existing debt,
estimated tax liabilities and transaction expenses), and Seagate's investment
securities and shares of VERITAS common stock, after applying negotiated
discounts with respect to the investment securities and VERITAS stock. In
addition, Seagate's current stockholders would also receive the benefit of tax
refunds and credits attributable to Seagate's pre-merger taxable periods to the
extent those refunds and credits are received or utilized by VERITAS.
From Seagate's perspective, the primary purpose of the combined transaction
is to enable Seagate's stockholders to realize the value of a significant
portion of the VERITAS stock currently held by Seagate in a manner that should
not subject Seagate or them to an immediate tax liability. Seagate currently
owns 128,059,966 shares of VERITAS common stock. If Seagate were to distribute
this VERITAS stock to its stockholders through a dividend or other form of
distribution, both Seagate and its stockholders would incur an immediate tax
liability. For example, the corporate tax and the type of distribution would be
approximately 40%. Seagate and VERITAS have agreed to effect the merger in which
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Seagate's stockholders will collectively receive 109,330,300 shares of VERITAS
common stock in exchange for their Seagate stock, and the 128,059,966 shares of
VERITAS stock that Seagate currently holds will thereafter be indirectly owned
by VERITAS. Seagate's stockholders will receive fewer shares of VERITAS stock in
this merger than Seagate currently holds because VERITAS negotiated a discount,
which is approximately 14.6%, compared to the 40% comparable tax rate. Seagate's
stockholders should receive these VERITAS shares on a tax-free basis.
VERITAS is not willing to acquire Seagate's operating assets. Therefore,
another purpose and required component of the transaction is to sell Seagate's
operating assets prior to the merger. The $2 billion (subject to some
adjustments) that Seagate will receive from the private equity group in exchange
for its operating assets and $765 million of cash reflects the negotiated value
of those operating assets.
From VERITAS' perspective, the primary purpose of the transaction is to
acquire the block of VERITAS stock currently held by Seagate at an effective
discount of 14.6% and eliminate Seagate as its single largest stockholder. From
the private equity group's perspective, the primary purpose of the transaction
is to purchase Seagate's operating assets and thereafter control Seagate's
operating business.
As we noted at the outset of this letter, the combined transaction is very
complex and any overview necessarily will be incomplete. Appendix A to this
letter contains a graphical depiction of the asset transfers, payments and other
distributions associated with the combined transaction, which we hope will be
helpful as you read the Joint Proxy Statement/Prospectus.
After careful consideration, Seagate's board of directors has approved both
the leveraged buyout and the merger between Seagate and a subsidiary of VERITAS,
and has determined them to be fair to and in the best interests of Seagate and
its stockholders. Your board of directors unanimously recommends a vote FOR the
leveraged buyout and FOR the merger.
It is important that you use this opportunity to participate in the affairs
of Seagate by voting on the proposed transactions to be considered at the
special meeting. Whether or not you expect to attend the special meeting, please
complete, date, sign and promptly return the accompanying proxy in the enclosed
postage-paid envelope so that your shares may be represented at the special
meeting. YOUR VOTE IS VERY IMPORTANT. Returning the proxy does not deprive you
of your right to attend the special meeting and to vote your shares in person.
Sincerely,
Gary B. Filler Lawrence Perlman
Co-Chairman of the Board Co-Chairman of the Board
This document is dated , 2000 and was
first mailed to stockholders on or about
2000.
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[Asset Transfers and Payments Flow Chart]
* Consists of shares of Gadzoox Networks and Lernout & Hauspie, to the extent
not sold prior to the completion of the merger. All other investments are
included in the operating assets.
** Estimated at $6.79 per share. Equal to Seagate's existing cash plus $2.0
billion (less value of rollover equity) received in the leveraged buyout,
minus $765 million of Seagate's cash to be acquired by Suez Acquisition
Company, approximately $781 million necessary to repay or redeem Seagate's
existing debt, $479 million to satisfy tax withholding obligations arising in
connection with the acceleration of Seagate options, $72 million for
transaction costs, $150 million required to satisfy Seagate's estimated tax
liabilities, and from $150 million to $300 million to be withheld and
deposited in a trust pending the resolution of some Seagate tax audits. Does
not give effect to VERITAS' right to elect to reduce the cash paid in
connection with the merger by $500 million or $750 million and to issue
additional VERITAS shares in place of that cash, resulting in estimated net
cash per share of $4.71 and $3.68, respectively.
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LOGO
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Our Stockholders:
A special meeting of stockholders of Seagate Technology, Inc. will be held
at 9:00 a.m., Pacific Time, on , 2000, at located at
, for the following purposes:
1. To consider and vote upon a proposal to authorize and approve a Stock
Purchase Agreement, dated as of March 29, 2000, as amended, by and among
Suez Acquisition Company (Cayman) Limited, Seagate and Seagate Software
Holdings, Inc., and the sale by Seagate of all of its operating assets
pursuant thereto.
2. To consider and vote upon a proposal to adopt and approve an Agreement
and Plan of Merger and Reorganization, dated as of March 29, 2000, as
amended, by and among VERITAS Software Corporation, a wholly owned
subsidiary of VERITAS, and Seagate, and the merger of Seagate with a
wholly owned subsidiary of VERITAS pursuant thereto.
3. To transact any other business that properly comes before the special
meeting or any adjournments or postponements thereof.
The attached document describes in more detail the stock purchase
agreement, the merger agreement and transactions contemplated thereby. We
encourage you to read the entire document carefully.
We have fixed the close of business on September 22, 2000 as the record
date for the determination of stockholders entitled to vote at the special
meeting. Only holders of record of Seagate common stock on the record date are
entitled to notice of and to vote at the special meeting.
By Order of the Board of Directors
of Seagate Technology, Inc.
William L. Hudson
Senior Vice President,
General Counsel and Corporate
Secretary
Scotts Valley, California
, 2000
TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE SPECIAL MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY AND MAIL IT PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL
MEETING. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE SPECIAL
MEETING.
