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Filed by Webvan Group, Inc.
Pursuant to Rule 425 under the
Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
Subject Company: HomeGrocer.com, Inc.
Commission No. 000-29789
A. PRESS RELEASE
FOR IMMEDIATE RELEASE, 7 AM (EDT)
WEBVAN AND HOMEGROCER AGREE TO MERGE
COMBINATION EXPANDS MARKET REACH,
STRENGTHENS COMPETITIVE POSITION & CREATES ECONOMIC EFFICIENCIES
FOSTER CITY, CA AND KIRKLAND, WA (26 June 2000) - Webvan Group, Inc. (Nasdaq:
WBVN) and HomeGrocer.com, Inc. (Nasdaq: HOMG) today announced they have entered
into a definitive merger agreement under which Webvan will acquire
HomeGrocer.com in a stock-for-stock transaction. The transaction is valued at
approximately $1.2 billion, based on last Friday's closing price of $8.72 per
share of Webvan stock.
The merger unites two of the leading online retailers that have personalized
delivery capabilities. The combined company will operate under the name Webvan
Group, Inc.
The combination is expected to extend Webvan's market reach to a total of 13
U.S. metropolitan areas by the end of 2000. Webvan and HomeGrocer currently
operate in nine major metropolitan areas. By the end of the year, as a result of
the merger Webvan expects to serve metropolitan area markets in Atlanta,
Baltimore, Bergen County (NJ), Chicago, Dallas, Los Angeles, Orange County (CA),
Portland (OR), Sacramento, San Diego, San Francisco, Seattle, and Washington,
D.C.
Under the terms of the agreement, HomeGrocer.com stockholders will receive
1.07605 shares of Webvan common stock in exchange for each HomeGrocer.com share
held. Approximately 138 million shares of Webvan stock will be exchanged for all
currently outstanding shares of HomeGrocer.com.
The companies expect the transaction to close late in the third quarter or early
fourth quarter of 2000, upon satisfaction of customary closing conditions and
upon receipt of governmental and shareholder approvals. The merger will be
accounted for as a purchase transaction. The proposed merger was unanimously
approved by the boards of directors of both companies.
"Webvan's combination with HomeGrocer harnesses the energy and resources of both
organizations and creates an even more attractive shopping proposition for
consumers - one that will draw them out of traditional stores and into our
Internet marketplace," said George T. Shaheen, president and chief executive
officer of Webvan Group, Inc. "Clearly, the online marketplace is evolving. With
this merger, we are moving early and aggressively to consolidate two successful
companies to build a strong `Last-Mile' Internet retailer.
- more -
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"Webvan and HomeGrocer present an extraordinarily good business fit," Shaheen
continued. "This merger will reduce our combined capital needs and enhance our
financial strength. It generates significant marketing and operating
efficiencies. It is also a good fit from the standpoint of market reach,
expansion, and fulfillment and distribution infrastructure."
Mary Alice Taylor, chairman and chief executive officer of HomeGrocer.com, said,
"This merger establishes a clear leader in the online shopping segment. We
believe this combination will create greater shareholder value for both
companies, and will position the unified company for strong future growth.
"Our people are our strength, and we believe Webvan's employees share our
customer-centered approach to business," Taylor continued. "Together, we will
have the talent, technology, resources and scope to build a powerful physical
portal into the home and revolutionize the way people shop."
Upon completion of the acquisition, Webvan's founder Louis Borders will remain
as chairman of the board of Webvan Group, Inc. and Shaheen will continue as
president and chief executive officer of the combined company. In addition, two
new members will join Webvan's board of directors.
"This merger makes tremendous sense from every perspective," said Jim Barksdale,
partner of The Barksdale Group, who will be joining the Webvan board. "The
combination of Webvan and HomeGrocer creates a powerful Internet retailer with
broad market reach. The convenience of the Internet's total shopping experience
will be the hallmark of the combined companies."
(In addition to Borders and Shaheen, Webvan's current board of directors is
comprised of David M. Beirne, general partner, Benchmark Capital; Michael
Moritz, general partner, Sequoia Capital; Christos M. Cotsakos, chairman and
chief executive officer of E*Trade Group; and Tim Koogle, chairman and chief
executive officer of Yahoo!, Inc.)
ESTABLISHES CLEAR INDUSTRY LEADER
The transaction accelerates Webvan's commitment to online retailing and building
the infrastructure to be the leader in delivering the "Last Mile" of e-commerce.
"Webvan has always believed in building an efficient scalable infrastructure in
order to deliver the 'Last Mile' of e-commerce," Shaheen added. "With the
grocery category we are able to drive frequency of contact and build strong
customer relationships. We continue to augment these offerings with a broad
selection of premium consumer products such as books, personal electronics, and
home entertainment."
- more -
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CONFERENCE CALL
Webvan will hold a conference call to discuss the merger. The call will be held
at 8:00AM (EDT) and hosted by George T. Shaheen and Mary Alice Taylor. It can be
accessed by dialing (712) 271-1134. The replay of the call can be accessed by
dialing (402) 998-1146 and will be available beginning today, Monday, June 26
until Monday, July 3, at 12:00 Midnight (PDT).
ABOUT WEBVAN
Webvan Group, Inc. is setting a new standard for Internet retailing, combining
for the first time the convenience of online shopping with a personalized
courier service that delivers products into customers' homes within a 30-minute
window of their choosing. Through its Web site, http://www.webvan.com, Webvan
offers a broad selection of quality products at competitive prices. The
company's relentless focus on customer service, innovation, and value saves its
customers time and money. Webvan's corporate headquarters are located in Foster
City, CA.
ABOUT HOMEGROCER.COM
HomeGrocer.com, based in Kirkland, Wash., combines technology with highly
personalized service to revolutionize the way people shop. The HomeGrocer.com
system integrates its Internet Web site, www.homegrocer.com, with its customer
fulfillment centers and fleet of tri-temperature trucks to deliver the highest
quality products directly to consumers' homes or offices. HomeGrocer.com offers
an extensive selection of groceries and household goods, including name-brand
items, top-quality produce, meats, seafood and dairy products, fresh flowers,
health and beauty aids, and top-selling books, videos and movies.
HomeGrocer.com's shares are quoted on the Nasdaq under the symbol "HOMG."
WHERE YOU CAN FIND ADDITIONAL INFORMATION:
Investors and securityholders are urged to read the joint proxy
statement/prospectus regarding the proposed merger when it becomes available
because it will contain important information about the transaction. The joint
proxy statement/prospectus will be filed with the Securities and Exchange
Commission by Webvan Group, Inc. and HomeGrocer.com, Inc. Investors and
securityholders may obtain a free copy of the joint proxy statement/prospects
(when it is available) and other documents filed by Webvan and HomeGrocer.com
with the Commission at the Commission's Web site at www.sec.gov. The joint proxy
statement/prospectus and these other documents may also be obtained for free
from Webvan or HomeGrocer.com.
- more -
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Webvan and its executive officers and directors may be deemed to be participants
in the solicitation of proxies from Webvan's stockholders with respect to the
transactions contemplated by the merger agreement. Information regarding such
officers and directors is included in Webvan's Proxy Statement for its 2000
Annual Meeting of Stockholders filed with the Securities and Exchange Commission
on May 11, 2000. This document is available free of charge at the Securities and
Exchange Commission's Web site at http://www.sec.gov and from Webvan.
Homegrocer.com and its executive officers and directors may be deemed to be
participants in the solicitation of proxies from shareholders of HomeGrocer.com
with respect to the transactions contemplated by the merger agreement.
Information regarding such officers and directors is included in
HomeGrocer.com's S-1 Registration Statement filed with the Securities and
Exchange Commission on December 17, 1999. This document is available free of
charge at the Securities and Exchange Commission's Web site at
http://www.sec.gov and from HomeGrocer.com.
---
Safe Harbor Statement under Private Securities Litigation Reform Act of 1995:
The statements contained in this press release that are not historical facts,
including statements relating to enhanced financial strength, improved economic
and operating efficiencies, expansion potential and infrastructure compatibility
are forward-looking statements that involve certain risks and uncertainties,
including but not limited to risks associated with difficulties in successfully
integrating Webvan's and HomeGrocer's businesses and technologies; costs related
to the merger; the availability of funds required to achieve our expansion
plans; failure to obtain required stockholder or regulatory approvals of the
merger; failure of the combined company to retain and hire key executives,
technical personnel and other employees; difficulty of successfully managing a
larger, more geographically dispersed organization; difficulties in developing
relationships with suppliers of non-grocery product categories necessary to
function as the last mile of e-commerce.
CONTACTS:
Media: Investors:
Bud Grebey Bob Okunski
Webvan Group, Inc. Webvan Group, Inc.
650.627.3558 650.627.3944
Pauline Yoshihashi Dan Lee
HomeGrocer.com HomeGrocer.com
425.201.7599 425.201.7848
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B. BROADCAST VOICEMAIL MESSAGE TO ALL WEBVAN ASSOCIATES
"Good morning. This is George Shaheen, with an important message for all Webvan
Associates.
I am very excited to share with you some important news about our company.
Early this morning, Webvan announced an agreement to acquire HomeGrocer.com.
I wanted to personally notify you of this news before you begin your work day.
Webvan's merger with HomeGrocer will provide many important benefits for our
customers, shareholders, and you, our Associates. It further leverages Webvan's
strong presence in the e-commerce space, builds our customer base, strengthens
our branding and marketing efforts, and immediately extends our presence into
new markets across the country. As a result of the merger Webvan expects to
serve metropolitan area markets in Atlanta, Baltimore, Bergen County (NJ),
Chicago, Dallas, Los Angeles, Orange County (CA), Portland (OR), Sacramento, San
Diego, San Francisco, Seattle, and Washington, D.C.
I recognize that today's announcement will generate numerous questions. I want
to assure you that your questions and concerns will be addressed. I ask your
patience and understanding as news of this announcement unfolds.
This morning, I will be sending out an all-Associates email that provides more
details about today's announcement. In addition, we will be hosting an All-Hands
meeting in Foster City at 10:30am (Pacific Time). This meeting will be audio
broadcast to all of our offices via a toll-free telephone line. Details on this
meeting will be included in this morning's email.
Our acquisition of HomeGrocer is an exciting development in Webvan's evolution.
Let's remember that we are building a very special company.
Thanks."
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C. BROADCAST E-MAIL MESSAGE
Date: 26 June 2000
To: All Employees of Webvan Group, Inc. and HomeGrocer.com, Inc.
From: George T. Shaheen & Mary Alice Taylor
We are very excited to announce the agreement for the merger of Webvan Group,
Inc. and HomeGrocer.com, Inc.
Uniting Two Great Organizations
This merger will combine the power of two great companies. It provides
clear and important benefits for our customers and shareholders, and for you,
the employees of both organizations. Together we can build a company that is
stronger and faster than either organization by itself.
Webvan and HomeGrocer share a business vision that is reflected by the
employees of both companies. We believe that this common business philosophy
will play an important role in facilitating a successful union of our two great
companies into a single more powerful enterprise.
We fully understand, however, that the integration of our two organizations
is not something that will happen spontaneously. We have given careful thought
to its implications on you and your families. Throughout this process, every
effort will be made to keep you informed and to address any questions that may
arise.
All-Hands Meeting
From 10:30 - 11:30 (PDT) this morning, we will be hosting an All-Hands
meeting for employees of both companies at the Crowne Plaza Hotel, 1221 Chess
Drive, Foster City, CA.
Unfortunately, it is impossible for us to meet in person with all of you in
one location. Therefore, we will be video broadcasting our meeting via a
satellite link to HomeGrocer offices in Kirkland and Bellevue.
A toll-free telephone number has been set up for those of you who cannot
attend the meeting at one of the above sites. You will also be able to call a
toll-free number to hear a replay of today's meeting. The call-in number is:
* 888-827-9992
* Replay number & password = 888-275-5257 ID# 2348
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At today's meeting we will share with you what we can about the structure
of our newly combined company, and answer some of the initial questions that we
know may be on your mind.
Next Steps
Today, we announced an agreement to merge, but there are still many steps
ahead before we can begin to operate as one company. Until this agreement is
ratified by the shareholders of both our companies and the regulatory process is
completed, we must operate as independent businesses.
We are counting on all of you to continue to provide the superior service
that our customers and shareholders expect of us during this period. In return,
we promise to be responsive to your questions and concerns and are committed to
open and timely communications.
Throughout this process, we also promise that every employee, at every
level in both organizations, will be treated with respect. Our employees are the
most important ingredients in our businesses. The value of this merger comes
from the power of our combined workforce, our shared business vision, and our
mutual respect for each other.
We hope you share our enthusiasm about today's announcement. You are going
to be learning a lot more about our new company in the coming days and weeks.
Together, we will be building a very special company.
George and Mary Alice
A copy of today's press release is attached for your information.
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D. CONFERENCE CALL SCRIPT
OPERATOR: Explains format of call; introduces Bob Okunski
OKUNSKI: Thank you XXX. Good morning and thank you for participating in today's
conference call to discuss the merger of Webvan and HomeGrocer. With us today
from Webvan are George Shaheen, President and CEO of Webvan, Mary Alice Taylor,
Chairman and CEO of HomeGrocer.com and Bob Swan, Webvan's Chief Financial
Officer.
Following our comments, we will open up the call for questions
I would first like to caution you that during the course of today's call,
management will make projections and forward-looking statements, regarding the
company's operations and future financial performance. We'd like to remind you
that these statements are predictions and that actual events and results may
differ materially from those forward-looking statements. We refer you to the
documents that each company has filed with the Securities and Exchange
Commission, including their respective Form 10-Qs for the first quarter of 2000,
which identify certain key risk factors and uncertainties that could cause
actual results to differ materially from the projections and forward-looking
statements. Additional risks you should consider in assessing such statements
include risks associated with:
o difficulties in successfully integrating Webvan's and HomeGrocer's
businesses and technologies, and in achieving savings, operating
efficiencies and margin enhancements from this integration;
o the availability of capital to fund expansion plans;
o the failure to obtain required stockholder or regulatory approvals of the
merger;
o the difficulty of successfully branding Webvan as a multi-category
retailer;
o and the difficulties the combined company may face in managing its changing
relationships with suppliers and strategic partners, in retaining key
executives, technical personnel and other employees, and in successfully
managing a larger, more geographically dispersed organization.
And now I'd like to turn the call over to George. George, please go ahead.
SHAHEEN: Thank you Bob. I want to welcome all of you to today's conference call.
We are very excited to announce the merger of Webvan and HomeGrocer this
morning. This merger
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combines the strengths of the 2 premiere online shopping and delivery companies
both with the capabilities to deliver the "last mile" of e-Commerce. We believe
the combination of our companies will allow us to gain geographic coverage
faster with less capital outlay and redundant operating costs and concentrate
our competitive focus on the `brick and mortar' competitors.
I would like to start out by discussing the benefits that this transaction
presents to our customers, employees and shareholders. I would then like to turn
over the call to Mary Alice Taylor, Chairman and CEO of Homegrocer, and then to
Bob Swan who will discuss the transaction in more detail. After our comments we
will open up the call to questions.
First, I would like mention some highlights concerning this transaction that Bob
will expand on later:
o TERMS OF THE TRANSACTION: Approximately 1.076 shares of Webvan stock for
each share of Homegrocer share representing 28.3% of the combined company
o COMBINED COMPANY METRICS AS OF MAY 30TH: 9 total markets, 264,000 active
customers, shipping 6200 orders per day with an average order size of $98
with repeat orders at 75%
o SHARED ECONOMIC PHILOSOPHIES: Capitalize on the annual spend of a grocery
customer of approximately $5,000 and leveraging the frequency of contact to
expand on additional product offerings
o FINANCIAL HIGHLIGHTS FOR 2001: By the end of 2001, we will be in 15
markets. Compared to where we would be on a standalone basis, Webvan will
be generating revenues approximately 50% greater with better operating
margins, and requiring approximately 50% less cash to get there
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Today, we operate complimentary business models that deliver a common
internet shopping experience with delivery to the home. Individually, both the
Webvan and HomeGrocer model have demonstrated the success of this personalized
shopping experience. This combination is about pooling our collective experience
in our goal to become the dominant "last mile" retailer and it creates a
powerful capability that redefines the competitive landscape of an industry.
I'll get into greater detail later on but the purpose of this transaction is
simple:
TO:
1. Accelerate our market presence
2. Target competitive focus
3. Improved operational and financial strength
Our vision from the beginning has been to be the provider of the "last mile" of
e-commerce. In order to do this we need to continue to rely on a scalable,
replicable infrastructure that is able to handle the rapid rise in e-commerce
shopping. We chose to start with groceries to achieve operational density, and
order frequency. By delivering these products to our customers' homes within a
30-minute window of their choosing, we have established strong relationships
that we are leveraging to other merchandise categories . This transaction
accelerates our vision and lays the groundwork to take advantage of our combined
scale.
I would now like to turn the call over to Mary Alice Taylor, Chairman and CEO of
HomeGrocer. Mary Alice?
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MARY ALICE: Thank you George. Over the past year, the online grocery business
has grown tremendously. Forrester Research estimates that online grocery
purchases alone will reach $16.8 billion by 2004. This transaction provides a
powerful combination of two major on-line retailers with effective last mile
capabilities and permits us to focus our attention on changing the traditional
shopping experience. By leveraging the best practices of each company and
combining our respective infrastructures, we are creating a stronger, more
powerful company that will enable us to continue our strong growth. Both Webvan
and HomeGrocer share a common vision of using technology to improve the
inefficient and time-consuming task of shopping. Our goals are to provide our
customers the convenience of home delivery while maintaining the highest level
of service, selection and quality at competitive prices. Our similar shopping
and customer service philosophies, strong fulfillment and distribution
capabilities and commitment to enabling the internet `full shopping' experience
results in a "win/win" not only for our customers but also for our shareholders
and employees. George...
GEORGE: Thanks Mary Alice.
Strategically, this combination makes tremendous sense and solidifies our
leadership position in our industry with the ability to utilize our
complementary business models to provide our customers with an unparalleled
shopping experience. As for our shareholders and employees, we are creating a
much stronger competitor that is committed to delivering on our vision of the
providing the "last mile" of e-Commerce.
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Let me elaborate more on the reasons for this transactions:
ACCELERATES OUR MARKET PRESENCE
Specifically, this transaction will allow us to leverage the existing market
presence of both companies. By the end of 2000, we anticipate that the combined
company will be serving a total of 13 metropolitan markets, increasing Webvan's
overall markets served as a percentage of food and drug sales by 62%.
Additionally, the combination of our two models gives us tremendous flexibility
in our approach to new markets: not only do we expect to be able to enter new
markets more cost efficiently, but we also expect to improve operational
performance within existing markets, realizing additional cost savings.
TARGET COMPETITIVE FOCUS
By merging our two rollout schedules, we will eliminate overlap in a number of
metropolitan areas. We anticipate that we will realize significant saving in
capital expenditures and marketing expenses. This combination will reduce the
time, money and effort to undertake marketing, operating and other focused
programs to win the loyalty of internet shoppers. Rather, all competitive
energies will be focused on developing long term, loyal customers to Webvan and
it `total shopping experience'. These focused efforts will target where the
majority of potential customers shop today - `brick and mortar' stores. Without
the merger both stand alone companies had to expend monies to win the customer
from the `brick and mortar' alternative and then they
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each had to spend additional monies to win the customer from the other. The
total spend can now be more efficiently directed on the `brick and mortar'
competitors.
IMPROVE OPERATING AND FINANCIAL STRENGTH
THIS combination will enable us to improve our operational performance by
achieving greater economies of scale, leveraging the best practices of each
company and eliminating HQ redundancies. Let me briefly touch on each:
ACHIEVE ECONOMIES OF SCALE Both companies currently have an extensive
network of partners within the industry including top consumer product
goods companies and national wholesalers. By combining these relationships,
we will be able to strengthen and further leverage our supply chain as we
increase our purchase volume and geographic footprint. These relationships
will not only enable us to benefit from our larger scale by increasing our
purchasing power but also offer our partners a more powerful marketing
conduit as we combine our customer bases.
LEVERAGE BEST PRACTICES Each company has demonstrated tremendous success in
the markets in which they operate. By combining our collective experience
and existing relationships, we can improve the operational efficiency of
the combined company.
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This merger will not only enable us to share existing knowledge capital and
apply it to current markets but also leverage this knowledge for future
market expansion. We also believe that combining the best practices of each
company will afford us greater operational efficiency. In addition to
uniting our technology, we will be able to improve the overall consumer
shopping experience by utilizing our strong service organizations to
continue to drive order frequency, customer satisfaction and further build
on our existing customer relationships.
HQ SYNERGIES
At this point we have made no decisions concerning headcount and will
carefully look at every position throughout both organizations before doing
so. Webvan and Homegrocer share a business vision that is reflected by the
employees both companies. We believe that this common business philosophy
will play an important role in facilitating the integration of the two
companies. We anticipate that it will take roughly 6-9 months to fully
integrate our technology, marketing, and corporate teams from the estimated
closing date for the transaction in late third/early fourth quarter of this
year. As we evaluate each organization and its synergies, we will give
additional guidance in the future as to the integration costs and savings
involved.
Our shared philosophies of quality, convenience, selection and customer service
will hopefully enable us to achieve a leadership position in a rapidly growing
industry. In today's environment,
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consumers are looking for ways to save time as they try to balance their work
and family life. This merger will allow us to tighten our focus on changing
consumer's behavior by replacing their trip to the store with an alternative
that gives them back their most precious commodity - time.
I would know like to turn the call over to Bob who will go into more detail
about the combination.
Bob...
BOB: Thanks George.
I would like to give a little more detail on both the terms and benefits of the
deal.
Under the terms of the agreement, Homegrocer.com stockholders will receive
approximately 1.076 shares of Webvan Group common stock in exchange for each
share of Homegrocer common stock, which equates to 28.3% of the combined
company. Approximately 138 million shares of Webvan Group common stock will be
exchanged for outstanding shares of Homegrocer. The transaction, valued at
approximately $1.2 billion based on the Friday's closing price of Webvan stock,
will be accounted for as a purchase transaction. We anticipate that the
transaction will close late in the third quarter or early fourth quarter.
The benefits will Accelerate our top line growth, Lower our Capital
requirements, Improve our Operations and Strengthen our Balance Sheet.
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TOP LINE EXPANSION BY ACCELERATING OUR MARKET PRESENCE: Webvan's previuosly
announced plans were to be in 15 cities by the end of '01. On a pro-forma basis,
this combination immediately triples our served markets from 3 to 9 major
metropolitan areas. WBVN's 2 existing distribution centers serve the Bay Area,
Sacramento and Atlanta markets. Homegrocer's 7 customer fulfillment centers
serve LA, Orange County, Dallas, San Diego, Seattle, and Portland.
By year end '00, we anticipate our served market to be over $100B as we add
Distribution Centers in NJ and Baltimore, and serve the Wash DC market out of
our Baltimore facility. Currently, we plan on adding 2 additional distribution
centers in the first half of '01, putting us in 15 markets in the next 12
months. This transaction will put us in 15 markets ...faster, resulting in
revenue 50% greater than WBVN's stand alone plans.
REDUCING CAPITAL REQUIREMENTS AND BY MERGING OUR NATIONAL EXPANSION PLANS: The 2
companies, operating on a stand-alone basis, would compete in 9 of the 15
metropolitan areas WBVN planned to be in by year-end '01. By combining the 2
companies, we will eliminate the capital, operating and marketing costs required
to establish a separate brand and physical presences in these metropolitan
areas, permitting us to compete more effectively with the competition. We
estimate that by leveraging the existing presence of each company and merging
our expansion plans we will save approximately $200 million in Capital
investment in '00 and 01.
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MORE EFFICIENT OPERATIONS: We believe we can improve operations by leveraging
the best practices and relationships of the 2 companies, combining our
purchasing power and eliminating redundant operations.
- BEST PRACTICES: By leveraging the Best practices and the buying power
of the two companies, we believe we can expand our gross margin
200-300 basis points, increase our average order size and improve our
combined inventory turns. We believe we can achieve these benefits as
we migrate to a common technology platform and service offering.
- HQ SYNERGIES: As George mentioned, we will take a look at each company
as we go through the integration process in order to evaluate the
redundancies inherent in the combination. While it's early for us to
give specific guidance as to the cost savings, we anticipate that we
will save approximately $20-30 MILLION IN HEADQUARTERS AND MARKETING
COSTS in 2001 as we combine the headquarters operation and eliminate
duplicate marketing spend.
STRONGER BALANCE SHEET
Our combined balance sheets showed a total cash position of approximately
$650 million at the end of May -- with minimal debt. The combined company
will be in 15 markets by mid 2001 and need approximately $275 million in
additional capital to get there, approximately 1/2 the capital required by
Webvan on a stand alone basis. Additionally, in the event the capital
markets remain closed, we believe the combined company has the
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ability under some slightly more aggressive assumptions to curtail its
expansion plans and self fund its growth over time.
GUIDANCE
We see pro-forma revenue for the combined company to be in the range of $300 to
$325 million in 2000 and $1.1 to 1.2 billion in 2001. In '01, we anticipate a
500-600 basis point improvement in operating losses and requiring approximately
1/2 the cash to reach our revenue target versus analyst expectations for Webvan
on a stand alone basis.
In summary, we are extremely excited about today's transaction. This combination
solidifies our leadership position and gives us the flexibility needed to
continue our rollout of delivering the "last mile" of E-commerce. This
transaction will accelerate our presence in these 15 markets for a fraction of
the required cash, while generating revenue in excess of $1.1 billion, much
quicker that either company could achieve on a stand-alone basis. We are looking
forward to replicating our success across the country as we pursue our vision of
making Webvan.com the destination for Internet shopping.
o Q+A
We will now open the call up for questions.
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E. EMPLOYEE TELECONFERENCE SCRIPT
Good morning - or for those of you who are joining us by phone from points-east
- good afternoon. I want to thank you for joining us today.
I am George Shaheen, president and CEO of Webvan.
Joining me is Mary Alice Taylor, the chairman and CEO of HomeGrocer.com
As you are all aware, this morning we announced a merger agreement between
Webvan and HomeGrocer.
I am personally very excited about this agreement, and I hope all of you share
my enthusiasm regarding this important milestone in the history of our two
companies.
This morning, Mary Alice and I will share with you some of the details of this
announcement and outline some of the steps we must take to combine two
successful organizations into one great company.
I'd like to take a moment to go over the format of this morning's meeting. In
the meeting room with us this morning are Associates from Webvan's corporate
offices in Foster City, California. This meeting is being broadcast via
satellite to HomeGrocer's corporate offices in Bellevue and Kirkland,
Washington, and Associates from both companies are joining us by phone from
locations across the country.
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Following our comments, we will hold a brief question and answer session for
those of you present in our meeting room in Foster City. Tomorrow morning at
9:30, Mary Alice and I will be hosting an All-corporate meeting for HomeGrocer
employees at the Factoria Theater in Bellevue, where we will be able to take
your questions in person. And, over the next few days, Mary Alice, I, and other
members of our management teams will be traveling across the country to meet
with Associates and answer your questions.
I know I can speak for Mary Alice in stating that the most important ingredients
in this proposed merger are you - the fantastic employees of Webvan and
HomeGrocer.
The value of this merger comes from the combined power of our employees and our
shared business vision and mutual respect for each other.
We recognize that this news is a surprise for most of you and that it raises
several questions.
Mary Alice and I - as well as the management teams of both organizations, are
committed to regularly communicating with all of you in an open and timely
manner.
This morning we will share with you what we can about the structure of our newly
combined company, and answer some of the initial
<PAGE> 21
questions that we know may be on your mind. I ask your patience and
understanding if we are unable to answer some of your questions. We don't have
all the answers yet, but we will get information out as soon as possible.
Webvan's combination with HomeGrocer harnesses the energy and resources of both
organizations and creates an even more attractive shopping proposition for
consumers - one that will draw them out of traditional stores and into our
Internet marketplace.
Clearly, the online marketplace is evolving. With this merger, we are moving
early and aggressively to consolidate two successful companies to build a strong
and pure Internet retailer.
<PAGE> 22
Through this merger we will extend our combined market reach to a total of 13
U.S. metropolitan areas by the end of 2000. By the end of the year, we expect to
serve markets in
o Atlanta
o Baltimore
o Bergen County (NJ)
o Chicago
o Dallas
o Los Angeles
o Orange County (CA)
o Portland (OR)
o Sacramento
o San Diego
o San Francisco
o Seattle, and
o Washington, D.C.
We anticipate the transaction to be completed late in the third quarter or early
fourth quarter, upon the customary government and shareholder approvals.
<PAGE> 23
As the merger works its way through the approval process, Associates of both
Webvan and HomeGrocer will be preparing organizational and operating plans so we
can move quickly as soon as the merger is completed. I have asked Vivek Joshi,
Webvan's vice president of program management, to serve as the executive to
spearhead this integration planning.
Until this agreement is ratified by the shareholders of both our companies and
the regulatory process is completed, we must operate as independent businesses.
It is of utmost importance that those of you not directly involved in the
integration planning stay focused on the job at hand. During this period, we are
counting on all of you to continue to provide the superior service that our
customers and shareholders expect of us.
Once the merger is completed, the combined company will operate under the name
Webvan Group, Inc. The primary offices of the combined company will be in Foster
City, but we expect that there will continue to be an office in Kirkland with
significant responsibilities in the new company.
Remember, that this is a long process, not an overnight event.
<PAGE> 24
At present, no decisions have been made regarding personnel or organizational
structure beyond the senior-most management level. Until the merger is complete,
each company will make its own decisions about its operations. I want to assure
you that any future decisions about our organizational structure will be made
with careful evaluation.
Our integration will take time and cooperation, but I hope all of you will
recognize that this merger will bring an opportunity for growth, providing
exciting opportunities for qualified employees of both companies.
Individually, both Webvan and HomeGrocer, have demonstrated the success of
offering consumers a complete and personalized shopping experience.
This merger is about pooling our experience in our drive to become the #1
Internet retailer and it will create a powerful capability that redefines the
competitive landscape of e-Commerce.
I'd now like to turn the podium over to Mary Alice. Mary Alice....
<PAGE> 25
Mary Alice takes the podium
Thank you, George. We truly are excited about this merger--this transaction is
about growth, about building a bigger, stronger company more quickly than either
of us could have done on our own.
From day one, our goal has been to build a powerful physical portal into the
home by revolutionizing the grocery industry. And now, you will be part of a
bigger company that's positioned to do just that, and with the resources and
scope to grow faster than we could have by ourselves. There are growth and
advancement opportunities for qualified employees as this company continues to
expand.
This combination makes compelling strategic sense. The combined company will
have a bigger operating base, twice the revenues of either of us alone, and had
pro forma about $650 million in cash at the end of May. We can scale our rollout
strategies in a way that makes sense, and gets us the most bang for our buck. We
can benefit from taking the best practices of both operations, and focusing on
competing head-on with the bricks and mortar players. That's where the real
competition is.
The most important ingredient in this whole equation is you. You make us leaders
in this space, and you are the ones who make our great reputation for quality
and service a reality. Our customers love our service, and it's because of you.
Without you, our company would be nothing but trucks and warehouses.
<PAGE> 26
We understand that this may come as a surprise. We've been in this situation
ourselves, and we know that every one of you is thinking, "What does this mean
for me, my family, and my ability to advance?" We are committed to getting to
each of you as soon as we can with answers to your questions. As George said, we
may not have all the answers today, but we're working on getting them to you
promptly.
Thank you to all of our associates in Bellevue, Kirkland and at our CFCs for
joining us. George and I, along with our senior managers, will be traveling
around to all of our sites to meet with you face to face.
With that, I'd like to turn this back over to George...
GTS takes the podium
I also want to thank those of you in Bellevue, Kirkland, and on telephone lines
for joining us. I look forward to meeting with you personally in the immediate
future.
Let's remember that we are building a very special company.
Once broadcast feed is disconnected, GTS takes podium and opens the
floor to Q&A.
---
THE FOREGOING COMMUNICATIONS ARE BEING FILED PURSUANT TO RULE 425 UNDER THE
SECURITIES ACT OF 1933 AND DEEMED FILED PURSUANT TO RULE 14A-12 UNDER THE
EXCHANGE ACT OF 1934. THESE COMMUNICATIONS DO NOT CONSTITUTE AN OFFER OF SALES
OF SECURITIES. SHAREHOLDERS OF HOMEGROCER.COM, INC. AND OTHER INVESTORS ARE
URGED TO READ THE PROXY STATEMENT-PROSPECTUS WHICH WILL BE INCLUDED IN THE
REGISTRATION STATEMENT ON FORM S-4 TO BE FILED BY WEBVAN GROUP, INC. IN
CONNECTION WITH THE MERGER BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. AFTER
SUCH DOCUMENT IS FILED, IT WILL BE AVAILABLE FREE OF CHARGE ON THE SEC WEBSITE
AT WWW.SEC.GOV AND FROM WEBVAN GROUP, INC. AND HOMEGROCER.COM, INC. THROUGH THE
CONTACTS LISTED BELOW. COPIES OF ALL DOCUMENTS FILED HEREWITH MAY BE OBTAINED
FROM THE CONTACT AT WEBVAN GROUP, INC. LISTED BELOW. COPIES OF THE PRESS
RELEASE, BROADCAST E-MAIL MESSAGE, CONFERENCE CALL SCRIPT AND EMPLOYEE
TELECONFERENCE SCRIPT MAY ALSO BE OBTAINED FROM THE CONTACT AT HOMEGROCER.COM,
INC. LISTED BELOW.
CONTACTS:
Bob Okunski
Webvan Group, Inc.
650.627.3944
Dan Lee
HomeGrocer.com
425.201.7848
