Filed by Policy Management Systems Corporation
Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant
to Rule 14a-12 under the Sucurities Exchange Act of 1934.
Subject company: Policy Management Systems Corporation
Commission File No. 1-10557
Timothy V. Williams Charles T. Conway Jr.
Executive Vice President & Director, Corporate Communications
Chief Financial Officer (803) 333-5348
(803) 333-5638 E-mail: [email protected]
E-mail: [email protected]
POLICY MANAGEMENT SYSTEMS CORPORATION
RECEIVES LETTER FROM EDS
COLUMBIA, S.C., APRIL 28, 2000: Policy Management Systems Corporation
(NYSE: PMS) has received the following letter today:
Richard H. Brown
Chairman to the Board and
Chief Executive Officer
EDS
The Board of Directors of
Policy Management Systems Corporation
c/o G. Larry Wilson
Chairman, President and Chief Executive Officer
Policy Management Systems Corporation
One PMSC Center
Blythewood, South Carolina 29016
Dear Larry,
Since I joined Electronic Data Systems Corporation in January of 1999 we have
taken several steps to continue to grow EDS as a leading global provider of IT
services. Our strategy has been to provide the full range of IT capabilities
(e.g., systems integration, consulting, outsourcing) across vertical industry
markets with local delivery capabilities. While the equity markets have viewed
this focus quite favorably, we recognize that, under the right circumstances,
the best strategy may be to acquire companies that have strong capabilities in
particular vertical markets.
EDS has a keen interest in the insurance market and sees tremendous
potential in
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leveraging our existing IT and outsourcing skills in this industry. Our internal
work indicates that Policy Management Systems Corporation offers excellent
capabilities to assist us in capturing this opportunity. Accordingly, we have
followed with great interest your recent announcement with Welsh, Carson,
Anderson & Stowe and believe that we can offer your shareholders a more
compelling proposal.
Based on our preliminary review of publicly available information, our Board of
Directors has authorized us to propose a transaction in which we acquire 100% of
the outstanding common stock of PMSC for $18 to $20 per share, in cash. Because
of our limited access to information, this range does not reflect the additional
synergy value we may find in due diligence, which could allow us to improve our
proposal.
Our proposal offers several advantages over the transaction with Welsh
Carson:
- - The EDS proposal offers your shareholders a premium of approximately 30%
to 40% over the current offer and approximately 50% to 67% over the current
trading price;
- - The EDS proposal is 100% for cash;
- - The EDS proposal is for 100% of the outstanding shares;
- - The EDS proposal is not subject to any financing conditions; and
- - The EDS proposal can be closed more quickly than the proposed Welsh Carson
transaction. Effected by means of a cash tender offer, it can be closed three to
four months prior to your existing deal.
We appreciate that, in weighting our proposal, the obligation of the Board of
Directors of PMSC is to examine it from the standpoint of the best interests of
PMSC's shareholders. I recognize as well, however, the additional responsibility
that directors quite properly feel toward employees, management, the community
and customers being served. With this in mind, I am pleased to provide comfort
on all of these points.
- - The EDS proposal provides a broader platform and greater opportunities for
your employees and management team. We recognize the substantial contribution
that has been made by your employees and management team, and would intend that
all employees and substantially the entire management team join the EDS family;
- - The EDS proposal envisions maintaining PMSC's strong presence in the State
of South Carolina, and increasing such presence by moving other complementary
EDS operations into the State; and
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- - The EDS proposal, we are confident, will be favorably received by PMSC's
customers.
EDS is very interested in PMSC and believes that our proposal should be
compelling to your shareholders and advisors. While at this time our proposal is
necessarily preliminary and non-binding, we are prepared to proceed immediately
to perform due diligence and to make a binding offer. We currently believe we
could complete our due diligence and the negotiation of mutually agreeable
definitive agreements in a period of ten days to two weeks. To facilitate this
process, we are prepared to use the Welsh, Carson, Anderson & Stowe documents as
a basis for our negotiations.
We are excited about a transaction with PMSC and look forward to your response.
In light of the importance of this matter, we ask that you respond to us by the
close of business on Tuesday, May 2.
If you have any questions regarding our proposal, please contact me or Todd
Marin of J.P. Morgan, who we have engaged to assist us in this matter, at
212-648-7791.
Very truly yours,
Dick Brown
The Board of Directors has authorized the Company and its advisors to explore
this proposal with EDS.
On March 30, 2000, PMSC signed a merger agreement with an affiliate of
Welsh, Carson, Anderson & Stowe which provides that stockholders will have the
right to
elect to either retain their shares or to receive $14 per share in cash, subject
to between 75% and 93% of the existing shares being converted to cash.
PMSC, headquartered in Columbia, S.C., is the leader in providing
enterprise and electronic commerce application software, professional services,
and outsourcing designed to meet the needs of the global insurance and related
financial services industries. On January 21, 2000, PMSC announced it is
changing its name to Mynd. Information on PMSC and its products and services can
be found on the World Wide Web at http://www.pmsc.com.
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Statements about the proposed agreement are forward-looking statements that
involve risks and uncertainties. Among the factors that could cause actual
results to differ materially from those in the forward looking statements are:
the failure of the agreement to be consummated and those factors in PMSC's 1999
Annual Report on Form 10K/A and other reports and filings with the U.S.
Securities and Exchange Commission. PMSC
disclaims any intention or obligation to update or revise any forward-looking
statements.
PMSC has filed a preliminary proxy statement/prospectus relating to the
proposed merger with the Securities and Exchange Commission. PMSC will prepare
and file with the SEC a definitive proxy statement/prospectus. Investors are
urged to read the definitive proxy statement/prospectus, when available, as well
as other relevant documents filed by PMSC with the SEC because they will contain
important information. Investors will be able to obtain these documents for free
from the SEC's website, www.sec.gov, or from PMSC investor services at
www.pmsc.com. Information about participants in the solicitation of proxies for
the merger, including direct or indirect interests, by securities holdings or
otherwise, is included in the preliminary proxy statement/prospectus.
