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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 28, 2000
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Engage, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
000-26671 04-3281378
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(Commission File Number) (I.R.S. Employer Identification No.)
100 Brickstone Square, Andover, Massachusetts 01810
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(Address of Principal Executive Offices) (Zip Code)
(978) 684-3884
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(Registrant's Telephone Number, Including Area Code)
Engage Technologies, Inc.
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(Former Name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition or Disposition of Assets.
On April 28, 2000, Engage, Inc., a Delaware corporation (the "Registrant"),
completed its acquisition of Adsmart Corporation, a Delaware corporation
("Adsmart"), an online advertising network for the business-to-consumer and
business-to-business markets, and Flycast Communications Corporation
("Flycast"), a leading provider of Internet direct response advertising
solutions. The acquisitions were completed pursuant to an Agreement and Plan of
Merger and Contribution, dated as of January 19, 2000 (the "Merger Agreement")
by and among the Registrant, FCET Corp., a Delaware corporation and a
wholly-owned subsidiary of Registrant ("Transitory Subsidiary"), CMGI, Inc., a
Delaware corporation and the majority stockholder of Registrant ("CMGI"),
Adsmart and Flycast.
Prior to completion of the transactions contemplated by the Merger
Agreement, Adsmart was a subsidiary, and Flycast was a wholly-owned subsidiary
of CMGI. David S. Wetherell, a director of the Registrant, is President, Chief
Executive Officer and a director of CMGI. Prior to the completion of the
transactions contemplated by the Merger Agreement, Mr.Wetherell was a director
of Adsmart and President of Flycast. Andrew J. Hajducky III, a director of the
Registrant, is Executive Vice President, Chief Financial Officer and Treasurer
of CMGI. Prior to the completion of the transactions contemplated by the Merger
Agreement, Mr. Hajducky was a director of Adsmart and a director and Vice
President and Treasurer of Flycast. Craig Goldman, a director of the Registrant,
is a director of CMGI.
Upon the completion of the transactions contemplated by the Merger
Agreement, Adsmart and Flycast each became a wholly-owned subsidiary of
Registrant. Under the terms of the Merger Agreement:
First, all of the convertible promissory notes of Adsmart held by CMGI
were converted into shares of Series B Convertible Preferred Stock of
Adsmart and all of Adsmart's Series A Convertible Preferred Stock and
Series B Convertible Preferred Stock converted into shares of common stock
of Adsmart.
Second, all the holders of Adsmart common stock received common stock
of Registrant in exchange for their respective shares of Adsmart common
stock based on a conversion ratio determined by dividing 11,223,704 by the
sum of the number of shares of Adsmart common stock outstanding as of April
28, 2000 and the number of shares of Adsmart common stock subject to
outstanding options to purchase shares of Adsmart common stock issued by
Adsmart pursuant to its stock option plans or otherwise as of April 28,
2000.
Third, Transitory Subsidiary was merged with and into Adsmart, with
Adsmart being the surviving corporation (the "Surviving Corporation") (the
"Merger"). Concurrently with the Merger, CMGI contributed its holdings of
capital stock of Flycast to Registrant in exchange for 53,413,213 shares of
Registrant's common stock (the "Contribution"). Upon completion of these
transactions, CMGI owned approximately 87% of Registrant's common stock.
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Total consideration for the Contribution and the Merger is valued at
approximately $3.2 billion (based on the closing average per share price
of Registrant's common stock for the five days before and after January 20,
2000, the date the Registrant publicly announced that it had entered into
the Merger Agreement). In connection with the Merger, the Registrant issued
10,877,468 shares of its common stock (valued at $545.1 million), of which
10.8 million shares were issued to CMGI (valued at $541.8 million) for its
96% interest in the capital stock of Adsmart and 65,941 shares to the other
holders of Adsmart capital stock. Additionally, the Registrant has reserved
approximately 346,000 shares of Registrant's common stock (valued at
approximately $16.8 million) for issuance upon exercise of stock options to
purchase shares of the Registrant's common stock (which stock options
option holders received in the initial Merger in exchange for stock options
to purchase Adsmart common stock).
In connection with the Contribution, Registrant issued approximately
53.4 million shares of its common stock to CMGI for CMGI's 100% interest in
Flycast, valued at approximately $2.7 billion. Additionally, the Registrant
has reserved approximately 360,000 shares of Registrant's common stock
(valued at approximately $7.6 million) for issuance upon exercise of stock
options to purchase shares of the Registrant's common stock (Registrant
stock options were exchanged for stock options to purchase CMGI common
stock that were held by Flycast option holders prior to the Contribution
closing).
The transactions are intended to be tax free under Section 368(a) and
Section 351 of the Internal Revenue Code of 1986, as amended, and to be
accounted for as a combination of entities under common control (i.e., an "as if
pooling").
On May 1, 2000, Registrant announced the closing of the Merger and the
Contribution.
Item 5. Other Events
On April 28, 2000, Registrant changed its name to Engage, Inc.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
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Audited financial statements of Adsmart and Flycast, and the notes thereto,
required by this Item will be filed by amendment to this Form 8-K not later than
July 12, 2000.
(b) Pro Forma financial Information.
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The pro forma financial information required by this Item will be filed by
amendment to this Form 8-K not later than July 12, 2000.
(c) Exhibits.
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99.1 Agreement and Plan of Merger and Contribution, dated January
19, 2000, by and among the Registrant, CMGI, Inc., Adsmart
Corporation, Flycast Communications Corporation and FCET
Corp., incorporated by reference from Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission on March 16, 2000.
99.2 Press Release. FILED HEREWITH.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 11, 2000 ENGAGE, INC.
(Registrant)
By: /s/ Paul L. Schaut
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Paul L. Schaut
President and Chief Executive
Officer
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EXHIBIT 99.2
ENGAGE COMPLETES ACQUISITION OF FLYCAST AND ADSMART
EDITOR'S SUMMARY:
o Engage completes acquisition of Adsmart and Flycast; Transaction
increases CMGI's stake in Engage to approximately 87%
o Global integration of companies well underway in key areas of
technology, marketing, customer support, and sales bringing combined
entity to approximately 1,000 employees worldwide
o Company changes name to Engage, Inc. and continues evolution from a
technology provider to a technology-driven media company; Engage
connects marketers with specific online audiences and then offers
programs that bring audiences through the customer life cycle
o Company launches "Engage Connection" call center to allow customers
to reach across the now integrated group of companies through one
telephone number, 1-877-U-ENGAGE
ANDOVER, MASS., MAY 1, 2000 - Engage, Inc. (Nasdaq: ENGA), the leading provider
of next generation online marketing solutions and a majority-owned operating
company of CMGI, Inc., today announced the completion of its acquisition of
Adsmart Corporation, a subsidiary of CMGI, and Flycast Communications
Corporation, a wholly-owned subsidiary of CMGI. Under the terms of the
agreement, Engage issued approximately 64 million shares of Engage common stock
to CMGI for the purchase of Adsmart and Flycast, bringing the percentage of
Engage owned by CMGI to approximately 87 percent(1). The transaction has been
accounted for as a combination of entities under common control (i.e., "as if
pooling").
"These acquisitions combine three best-of-breed online marketing companies, each
with unique product offerings, to form a single, more powerful organization that
we believe will provide effective online marketing solutions to fit the growing
and changing needs of online marketers," said Paul Schaut, president and CEO of
Engage. "Through innovative ideas, technologies and product breadth and
strength, the new Engage is designed to change the way marketers use the
Internet as a tool to reach specific audiences, turn them into loyal customers,
and then measure and optimize results for a higher return on investment. This
new way of approaching the market is a competitive differentiator for us, and
will help our customers succeed in this fast-changing market."
INTEGRATION PROGRESS
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"Over the past few months, we have embraced an enhanced business strategy to
leverage our valuable assets and take advantage of the tremendous market
opportunities," explained Schaut. "Engage is well-positioned to effectively
transition and execute on our planned objectives. We have made significant
headway in the integration of our three companies."
Progress to date has been in several key areas:
o TECHNOLOGY
Engage is finalizing the integration of both the Flycast and Adsmart networks
with the powerful Engage Knowledge database of over 52 million behavioral-based
anonymous profiles. These profiles, which contain no personally identifying
information, are built based on a user's observed online behavior on over 3,000
Engage-enabled web sites, which is then converted into a score in 800 interest
categories. These interest categories are dynamically updated based upon the
user's recency, frequency and duration on various sites within the network.
(MORE)
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(1) All shares issued have been adjusted to reflect Engage's 2-for-1 stock split
paid on April 3, 2000 in the form of a 100% common stock dividend.
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ENGAGE COMPLETES ACQUISITION OF FLYCAST & ADSMART FROM CMGI
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o MORE POWERFUL MARKETING SOLUTIONS
By adding both Flycast's and Adsmart's targeting methodologies to its own,
Engage now has the capability to offer marketers of all sizes the ability to
target their audience through a variety of methodologies. The combination
provides the solutions necessary for marketers to identify and target audiences
across the Internet and then turn those audiences into loyal customers. In
addition, Engage offers unified reports of campaign results so customers can see
results measured and reported in one common format for campaigns run across the
Web.
o WORLDWIDE SALES ORGANIZATION
Engage's worldwide direct sales force of over 200 is now capable of representing
any Engage product or service. Because only 20 percent of Engage customers
currently use two or more Engage products, this new combined sales force is
poised for the many cross-selling opportunities that have arisen as a result of
the acquisitions.
o CUSTOMER SUPPORT
The "Engage Connection" call center is set up to navigate customer calls across
the Engage's newly expanded organization and improve the ability to serve
customers, partners and employees. The call center is an integral part of
Engage's next generation capabilities as it allows customers to reach anyone at
Engage through one phone number, 1-877-U-ENGAGE.
NEW COMPANY NAME AND BUSINESS STRUCTURE
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The Company has officially changed its name from Engage Technologies, Inc., to
Engage, Inc. The name change represents Engage's continuing evolution from a
provider of technology to a technology-driven media company. Engage believes
that the name change will create a stronger association between Engage and its
products and services in the minds of the investment community and potential
customers. Engage will be organized into the following business divisions:
o ENGAGE MEDIA
Engage Media was formed by combining three powerful online media network
properties; Engage's AudienceNet, Flycast and Adsmart, which will deliver
anonymous profiling, direct response, and branding solutions to marketers of all
sizes.
o ENGAGE BUSINESS MEDIA
The Engage Business Media division delivers targeted Web and email advertising
opportunities to B2B advertisers in the most sought after vertical markets. As
the largest B2B advertising network, Engage Business Media provides B2B
advertisers the ability to reach their customers online while providing B2B Web
publishers with multiple ways to monetize their inventory.
o ENGAGE ENABLING TECHNOLOGIES
Engage's Enabling Technologies division provides ad management and profiling
technology and services, such as AdManager, AdBureau and ProfileServer. These
products and services are designed to transform the way Web sites partner with
marketers to achieve business objectives.
(MORE)
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ENGAGE COMPLETES ACQUISITION OF FLYCAST & ADSMART FROM CMGI
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o ADKNOWLEDGE
AdKnowledge, a wholly owned subsidiary of Engage, focuses exclusively on the
needs of advertising buyers, offering analytic and data mining services along
with comprehensive outbound campaign management to provide marketers with a
higher return on investment.
o I/PRO
I/PRO, a wholly-owned subsidiary of Engage, is a leader in Web traffic
verification, analysis and research. The company analyzes, correlates and
validates site activity, which enables marketers to understand and improve their
online business.
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ABOUT ENGAGE:
Engage, Inc. (NASDAQ:ENGA) is the leading provider of next generation online
marketing solutions and is a majority-owned operating company of CMGI, Inc.
Based in Andover, Mass., Engage helps marketers target online audiences and
convert them into loyal customers. Engage has European headquarters in London
and offices worldwide. For more information on Engage, please visit
www.engage.com.
STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
This release contains forward-looking statements based on current expectations
or beliefs, as well as a number of assumptions about future events, and these
statements are subject to important factors and uncertainties that could cause
actual results to differ materially from those described in the forward-looking
statements. The forward-looking statements in this release address a variety of
subjects including, for example, the expected benefits and growth resulting from
Engage's acquisition of Flycast and Adsmart, the expected ability to integrate
the operations of Flycast and Adsmart with the operations of Engage, the ability
of the combined company to offer specific solutions to marketers and online
audiences, and the ability of Engage to provide superior targeting to its
customers. The following factors, among others, could cause actual results to
differ materially from those described in these forward-looking statements: the
risk that the businesses of Flycast and Adsmart will not be successfully
integrated with the business of Engage; the acquisitions may strain managerial
and operational resources as management tries to oversee the larger operations;
risks associated with entering into new market segments; slower than expected
growth in Internet advertising; the timely development of new profile-based
products and services; the adoption of new laws and regulations affecting the
provision of Internet advertising services, including laws and regulations
covering privacy, pricing and content; and increased competition and
technological changes in the industries in which Engage, Flycast and Adsmart
compete. For a detailed discussion of these and other cautionary statements,
please refer to the filings made by each of Engage and CMGI with the Securities
and Exchange Commission, including the Annual Report on Form 10-K of each of
Engage and CMGI for the most recently ended fiscal year.
Contacts:
Kathleen Kreis Tom Barth
Engage PR Engage IR
(919) 719-4550 (978) 247-5310
[email protected] [email protected]
