<PAGE>
Filed by Diamond Technology Partners Incorporated
Pursuant to Rule 425 under the Securities Act
of 1933 and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934 in respect of
Diamond Technology Partners Incorporated
Commission File No. 000-22125
In connection with the proposed transaction, Diamond will file with the
Securities and Exchange Commission a Registration Statement on Form S-4. The
registration statement will include a proxy statement of Diamond for a meeting
of its shareholders to consider and vote upon the issuance of Diamond shares in
the transaction and various related matters. The registration statement will
also serve as a prospectus of Diamond with respect to the shares of Diamond to
be distributed to shareholders of Cluster Telecom B.V. in the proposed
transaction. Diamond expects to mail the proxy statement/prospectus for the
transaction to the shareholders of both companies. Investors and security
holders are advised to carefully read the proxy statement/prospectus, when it
becomes available, because it will contain important information about Diamond,
Cluster, the transaction and related matters. Investors and security holders may
obtain a free copy of the proxy statement/prospectus and other documents filed
by the companies at the SEC's web site at http://www.sec.gov. The proxy
statement/prospectus and such other documents may also be obtained from Diamond
by directing such requests to Diamond Technology Partners Incorporated, John
Hancock Center 875 North Michigan Avenue, Suite 3000, Chicago, Illinois 60611,
attention: General Counsel (312-255-5000).
In addition to the registration statement and the proxy statement/prospectus,
Diamond files annual, quarterly and special reports, proxy statements,
registration statements and other information with the Securities and Exchange
Commission. You may read and copy any reports, statements or other information
filed by Diamond at the SEC public reference rooms at 450 Fifth Street, N.W.,
Washington, D.C. 20549 or at any of the SEC's other public reference rooms in
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. Diamond's filings with
the SEC are also available to the public from commercial document-retrieval
services and at the web site maintained by the SEC at http://www.sec.gov.
Diamond, Cluster, their respective officers and directors and certain other
members of management or employees may be deemed to be participants in the
solicitation of proxies from shareholders of Diamond with respect to the
transactions contemplated by the purchase agreement. A description of any
interests that Diamond's directors and executive officers have in proposed
transaction will be available in the proxy statement/prospectus.
###
<PAGE>
On September 11, 2000, Diamond and Cluster held a conference call with analysts,
investors and members of the public to discuss the Diamond Cluster business
combination. The following is the script of the presentation delivered on the
call. An audio replay of the conference call is available through the end of
the day on September 18, 2000 by calling 888-843-8996 (domestic) or 630-652-3044
(international) and entering the passcode 2820235.
A transcript of the conference call will be filed by Diamond with the Securities
and Exchange Commission pursuant to Rule 425 under the Securities Act of 1933 as
promptly as practicable.
###
DIAMOND TECHNOLOGY PARTNERS
Diamond Technology Partners and Cluster Consulting Merger
September 11, 2000
Julia Potter
------------
Good morning and thank you for joining us this morning. This is Julia Potter,
director of investor relations for Diamond. Before we get started, I'd like to
remind you that any statements in today's call that are not historical are
considered forward-looking and speak only as of today's date. Our actual results
may differ materially and you should be familiar with the risks and
uncertainties associated with our business which are highlighted in our filings
with the SEC including Form 10Q for the quarter ended June 30, 2000.
Diamond also plans to file a form S-4 registration statement with the Securities
and Exchange Commission relating to the Cluster transaction. The registration
statement will include a proxy statement of Diamond for a meeting of its
shareholders to consider and vote upon the issuance of Diamond shares in the
transaction and various related matters. Investors and security holders are
advised to read the registration statement and the proxy statement when they
become available because they will contain important information.
With that said, I would also like to remind everyone that this call is being
broadcast over the Internet. You can listen to the call and view accompanying
slides by going to our website at www.diamtech.com.
And, now I want to turn the floor over to Mel and his colleagues to tell you
more about the merger we announced this morning, and then we will open the call
to questions.
Mel Bergstein
-------------
TITLE SLIDE
Thanks, Julia...and good morning, everyone. This is Mel Bergstein. I am
delighted to be talking to you this morning about what I believe is perhaps the
most exciting thing that Diamond has done since it was founded six and a half
years ago. Today we announced a merger with a pan European digital-strategy
consulting firm specializing in broadband wireless and Internet business
strategies called Cluster Consulting. This deal is pan European. It is broadband
wireless. And it is cash accretive. Moreover, the chemistry, the values and the
vision are great and very compatible.
I am here this morning with several of my colleagues: Javier Rubio, CEO of
Cluster Consulting, Adam Gutstein, our president, Mike Mikolajczyk, our vice
chairman, and Karl Bupp our CFO, to tell you more about this deal and our
prospects for the future.
This merger is a move that we believe will catapult the combined company into a
global leadership position. This is about our joint vision to be a global
leader. And, it is in keeping with Diamond's stated acquisition criteria. This
deal is a strategic fit, an extraordinary cultural fit, it is cash accretive, we
have structured the deal to keep in the key players as well as the staff, and it
gives us significant global presence. We think that being global is critical to
future success because our clients, the Global 2000, are moving towards
transforming their entire companies driven by digital technology and they want
partners who are global and have scale.
We expect the combined company, which will be called DiamondCluster
International, will be the world's premier digital strategy and solutions
delivery firm. For Diamond, this combination gives us an immediate European and
Latin American footprint that accelerates our business plan at least two years.
This merger gives us deep broadband wireless and mobile strategy skills to
leverage the emerging broadband wireless consulting opportunity. This is the
only European company that we know that has this depth of broadband wireless
expertise. For Cluster, the combination accelerates their entry into North
America as well as accelerating the move across industries from a very strong
base in Telecom.
This morning, I want to talk about four things. We will tell you about who
Cluster is and help you understand how the combined firm will work and Javier
will talk about some of the work we have already begun to do together. Second,
we will give you the transaction details. Third, Adam will outline for you what
we are doing to around the integration. And, fourth, Karl will take you through
the financial impact and what it means to our shareholders. And, then we will
open the call to questions.
SLIDE 2 (NEW GLOBAL ENVIRONMENT)
Diamond was founded to help companies figure out how to leverage disruptive
technologies to their competitive advantage. That disruptor as of late has been
the Internet, primarily the traditional Internet. This will be around for a long
time. The new emerging disruptor is broadband wireless and mobility. Together,
this will create exponentially more opportunity, and sets the stage for moving
from killer apps to killer platforms that are about transforming the core
business. As Javier says, "Everything that can be digital, will be digital; and
everything that can be mobile, will be mobile."
This environment is what led us to the announcement we made today. The merger of
Diamond and Cluster creates a firm positioned on a global basis to be a leader
in the world of the new killer platform: broadband wireless technology and
mobile commerce.
SLIDE 3 (AGENDA)
So, now let me tell you about Cluster Consulting and how DiamondCluster will
compete moving forward.
SLIDE 4 (WHO IS CLUSTER)
Cluster is a leading pan European and Latin American digital strategy firm
specializing in broadband wireless and Internet. Cluster consultants have been
working in the executive suite helping CEO's map out their broadband wireless
strategies since the firm was founded seven years ago. As of today they have 370
consultants, in nine offices worldwide. Cluster is operating at a $100 million
dollar revenue run-rate. Remarkably, their operating metrics--including margins,
revenue per professional, and growth rate--are essentially the same as
Diamond's. Let me tell you, we looked at a lot of companies in Europe and this
is the only firm we found with this kind of quality and depth in strategy and
broadband wireless technology.
SLIDE 5 (COMPLEMENTARY GEOGRAPHY)
This merger gives DiamondCluster an immediate North American, European and Latin
American footprint with offices in Chicago, Boston, San Francisco, New York,
London, Paris, Dusseldorf, Munich, Barcelona, Madrid, Lisbon, and Sao Paulo.
The two offices that the combined firm have in London will be consolidated into
one office.
Cluster brings a proven approach for moving into new countries. First, you get
the work and people, and then you invest in the infrastructure. Cluster has
perfected this process and that will benefit the new company as we move into
other countries. We are currently planning to open offices in Stockholm, Milan
and Istanbul.
SLIDE 6 (EXTRAORDINARY SKILL MATCH)
And, not only are the geographies highly complementary but the skills of our
people, fit together extremely well. Both organizations are about leveraging
disruptive technologies. Both organizations have deep digital strategy,
technology and value management skills. The only real difference is that
Cluster's technology skills are about mobility and broadband wireless Internet
and Diamond's skills have been focused on the traditional Internet. These skill
sets and experiences are highly complementary.
Diamond also has a very successful solutions delivery capability, called Diamond
MarketSpace Solutions, or what we call DMS, which has been the primary reason
the company has seen accelerated growth in the last several quarters. DMS was
launched in June of 1999. The opportunity here is clear--to build out a DMS
capability in Europe and Latin America.
SLIDE 7 (BENEFITS TO CLIENTS)
What this means for our clients is the ability to offer international
perspective and depth in a pervasive emerging technology. Now I want to turn it
over to Javier to talk about a client where we have already worked together.
(JAVIER)
Good morning. Let me start by saying how excited we are about this merge with
Diamond Technology Partners. The resulting firm, DiamondCluster, develops our
vision in the best way we could have ever thought.
During the last two moths, and as part of the process of getting to know each
other inside out, we have put together some teams to work in various client
engagements and marketing initiatives. The results fully validated our initial
assessment of great cultural fit and extremely similar approach to client work.
As an example of these efforts we were able to get a major assignment for
Endesa, the largest utility in Spain, for whom we will be assisting in the
launch of a B to C portal for home related services. The outstanding referrals
from Diamond in this field, and the specific know how imported from Diamond in
developing the digital strategy with the support of the best technological
solution was instrumental in getting this project.
SLIDE 8 (LOGOS)
Within Diamond's client portfolio, the mobility factor and the implications of
the wireless broadband revolution will trigger an enormous amount of high level
work and the opportunity for developing leading edge strategies of great value
for the clients. From financial services firms to automakers, they will all
benefit from the disruption of this new killer platform. At the same time,
Cluster will be able to move the relationships with existing clients much
further, by covering new verticals such as financial services and consumer goods
much more rapidly. European 3G Telecom operators will go much beyond selling
airtime, they will provide all kinds of services to their clients, securities
trading, payments security systems, traffic information, monitoring of home
devices,.... With Diamond, the potential value we create for existing clients is
being augmented in a very material way.
Combining the additional work in existing clients with the enormous potential to
enter new industries, the prospects are outstanding and we all are very thrilled
about it and are looking forward to embracing them.
Mel?
(MEL)
Thanks, Javier.
SLIDE 9 (LEADING THE INDUSTRY)
You have seen, through the example Javier gave, that our new company creates a
powerful competitive position where we eclipse essentially every player in the
space, including the traditional strategic consultants. What our buyers value
is a partner that has deep strategy and deep technology skills, along with
overall value management skills. And, broadband wireless expertise is quickly
going to become a major consideration. They want someone that is familiar with
their industry, and a provider with scale and international scope that can work
in the executive suite. No other company has strength in international and
broadband wireless like DiamondCluster.
SLIDE 10 (CHUNKA CHART)
What we're getting here is really a super vertical--which is broadband wireless
--that will expand across all industries in the form of mobility and m-commerce.
In combination with the Internet, this will be the new killer platform. It will
happen in Europe first, but it will happen worldwide. We believe this is very
powerful.
SLIDE 11 (INTELLECTUAL CAPITAL)
Broadband wireless and mobility must become a new cornerstone in our
intellectual capital. As you know, renewable and scalable intellectual capital
is a key to long-term sustainability for a consulting firm. Cluster augments
Diamond's strong intellectual capital with a European perspective and broadband
wireless content. And, Diamond is experienced at packaging and disseminating
both internally and to the outside marketplace.
SLIDE 12 (MANAGEMENT TEAM)
The management team in place to lead this charge includes people with deep
experience in the industry and in the various geographies in which we are doing
business. Importantly, many of us have experience in running large,
international businesses. And, this team is supported by a group of over 100
partners. There is no officer corps of this size and quality among the public
companies in this sector. We believe, that pound for pound this group is as
strong as any officer corps, public or private.
SLIDE 13 (CLUSTER MANAGEMENT)
This experience translates to the Cluster organization, as well. Javier is
supported in Europe by a number of exceptional people with strong experience in
the industry. And to give you a feel of the other people at Cluster, their
partners' average age is mid-thirties and they are educated at the top business
schools. Professional backgrounds include strategy people BCG, Bain, Monitor,
McKinsey and consumer goods marketing people from American Express, Nestle,
Procter & Gamble, L'Oreal and Pepsi.
SLIDE 14 (CULTURE)
For those of you who know us, you can see that these backgrounds are the same
quality as the Diamond people. This parallelism is also reflected in the
cultures of the organizations. In my 30 years in this business, I have never
seen two organizations with more compatible cultures. Importantly, Cluster has a
campus-based recruiting model, which, as you know, we believe is absolutely
critical to the long-term success of a professional services firm. Like
Diamond, these people are SWANS--that is, smart, works hard, ambitious, and
nice.
SLIDE 15 (AGENDA)
Now let me tell you about the deal.
SLIDE 16 (TRANSACTION HIGHLIGHTS)
At Friday's close price, this is approximately a $930 million deal. It is cash
accretive, and it creates the premier global digital strategy and solutions
delivery firm. Some other highlights of the transaction include the expansion
of the board by three (3) seats. Javier Rubio, CEO of Cluster, will join the
board, as well as two (2) additional, mutually agreed upon independent
executives who we would expect to be European or Latin American. Finally, we
are expecting the deal to close in the fourth calendar quarter.
SLIDE 17 (TRANSACTION DETAILS)
The deal consideration consists of $44 million in cash, 6.3 million class B
shares and 7.6 million options, the majority of which vests over 4-5 years. Of
the 7.6 million options, 4.2 million go to the partner group of Cluster and vest
over 5 years. 1.5 million options go to the staff and vest over 4 years. 1.9
million are rollover options and vest over 4 years. You'll notice that only 5%
of the deal value is in cash. This is extremely important because it aligns our
interests with each other and with the shareholders. Partners and all employees
on both sides have significant performance-based compensation incentives. The
Cluster team is in this deal for the long haul.
SLIDE 18 (AGENDA)
Now we want to talk about the integration. We have taken Adam Gutstein, one of
our most senior executives, and put him in charge of the integration. He will be
working closely with Ferran Soriano, Cluster's vice president of corporate
development to ensure a smooth and rapid integration. Now let me turn it over
to Adam to talk about the integration process.
(ADAM)
Thanks, Mel.
Those of you that know us know that we are very thoughtful and practical about
our business decisions. We approached this deal with the same level of care and
precision. When we started this process, we assembled a team of 25 partners and
a dozen finance, HR and infrastructure people to focus on the due diligence
process. We went to Cluster's European offices and did a thorough due diligence.
We met with their people, we saw their projects, we talked to their clients, we
examined their pipeline, and we reviewed their infrastructure. In addition, and
we visited their offices and met with their partners, and they came to the US to
spend time with us. Cluster people visited our offices and looked carefully at
our pipeline and our client work, our intellectual capital and importantly they
met our people as well. Of course, Diamond being a public company, the Cluster
team was well prepared from public documents.
SLIDE 19 (INTEGRATION ISSUES)
That said, we recognize that there is risk. First, people issues. This is the
crux of the matter. As we just discussed, we purposefully structured this deal
to be stock and option based with long-term vesting to address the retention
issue. And the new global organization provides attractive career potential for
our current people and also for new recruits.
Second is clients. In terms of services, our capabilities are highly
complementary. We have already successfully sold and delivered work together,
and we have a number of marketing and intellectual capital based initiatives
underway. We feel great about the early strides and even better about the
potential.
Third, infrastructure redundancy. As Mel said earlier, there is very little
geographic overlap. One city, London, has two offices. These will be immediately
consolidated. As far as the technology and management systems, the platforms are
compatible; Cluster people are already on our Intranets and e-mails systems. We
are already migrating core processes around pipeline management, recruiting and
human resources and knowledge management to a common platform. Because they are
already quite compatible, we have a head start in the area.
Finally, the integration of the companies is a major focus for us. I will be
working closely with Ferran Soriano a senior Cluster executive to oversee the
integration.
SLIDE 20 (INTEGRATION TEAMS)
Ferran and I have seven teams put in place today to address people, clients,
intellectual capital, knowledge management, solutions delivery, positioning and
branding, and infrastructure, as well as overall risk mitigation. Our goal is to
enable the two firms working together as a single firm as quickly and
efficiently as possibly, as well as to discover and exploit additional leverage
points.
SLIDE 21 (INTEGRATION APPROACH)
While the integration is extremely important and will have Ferran's and my
principle attention, we are not taking our eye off the business. DiamondCluster
will continue to excel at what we each do today--creating and delivering
leading-edge digital strategy solutions to our clients, and delivering industry-
leading results for our shareholders. The integration areas we will focus on
immediately include:
Client Sales and Delivery--we are already working together at a number of
clients and intend to accelerate that effort.
People--we are holding partner and all-hands face-to-face meetings to
nurture the sharing of ideas and instill a "one-firm" culture.
Marketspace Solutions--we will begin building out our European and Latin
American solutions delivery capability.
Branding--We are launching a new brand--DiamondCluster International--to
convey the new global capabilities of our combined firm.
Knowledge Management--The combined company will have leading-edge knowledge
management capabilities to foster the sharing of intellectual capital
worldwide.
We have a lot of work to do and we are ready for it. We have the teams in place
to do what needs to get done in order to realize the full value of this
transaction and create a powerful future.
Now, let me turn it over to Karl to take you through the financial model. Karl?
(KARL)
SLIDE 22 (AGENDA)
Thanks, Adam.
We've discussed the strategic rationale for the proposed merger, the transaction
details and the integration effort. Now I'll take you through the financials.
This transaction provides immediate value to our shareholders. It will
accelerate revenue growth, will enhance cash flows and will be immediately cash
EPS accretive.
SLIDE 23 (PRO FORMA REVENUE)
First, let's look at the pro forma revenue. For the 1999 calendar year, pro
forma revenue for the combined entity was $156 million. For the first half of
calendar year 2000, pro forma combined revenue was $130 million.
SLIDE 24 (LEADING INDUSTRY METRICS)
But what is really important about the metrics here is that Cluster's operating
metrics are essentially the same as Diamond's, illustrating the strategic nature
of their work, the value they provide for their clients, and their ability to
run an efficient business. Of all of the companies we met, Cluster is the only
one that came close to our own operating metrics. Secular revenue growth target
for the combined company is 50%. And we're expecting operating margins in the
18%-20% range; after-tax margin before amortization in the 12-14% range and our
goal for revenue per professional is $400,000. In the short-term, turnover may
increase slightly above 15% for the combined voluntary and involuntary turnover,
but for the long-term we expect it to return to our traditional levels of 12%-
15%. As for DSOs, we think we will operate in the 35-45 day range until we can
prove to ourselves that the model we use in the US is transportable to Europe
and Latin America. This is still an outstanding metric.
SLIDE 25 (TARGET MODEL)
We expect Cluster to contribute revenue of $30 million in our fourth fiscal
quarter of 2000, assuming a late December close. Combined revenue for fiscal
2001 is expected to be $280 million. This represents about a 106% growth rate
over fiscal 2000. Going forward, we anticipate a 98% top line growth rate in
fiscal 2002, bringing the revenue number to $555 million. On a pro forma basis
the growth rate from fiscal 2001 to fiscal 2002 would be about 55%.
From a cash-EPS standpoint--cash EPS defined as excluding goodwill amortization
and non-cash charges--we would expect to deliver $1.15 in fiscal 2001 and $1.61
per share in 2002.
We expect practice headcount to grow to over 1,000 people by the end of December
2000 and to over 1,100 by the end of our fiscal year. We expect headcount next
year to grow about 45%.
We believe these metrics make this a very attractive deal for Diamond's
shareholders.
Now I'll turn it back over to Mel to wrap up.
(MEL)
SLIDE 26 (AGENDA)
Thanks, Karl. Now I just want to wrap it up by saying...
SLIDE 27 (SUMMARY--LEADERSHIP)
...this merger extends our opportunity to serve clients, to attract and retain
the best people, and build industry-setting intellectual capital. This is what
Diamond has always been all about, and we are fortunate to have found a partner
with the same values and vision.
So to summarize, we believe the formation of DiamondCluster will benefit our
clients because we will be able to help them innovate on a worldwide basis and
we will bring the latest, most impactful technologies to their businesses. We
believe that DiamondCluster's value proposition, footprint and skill base will
make us unique in clients' and prospective clients' eyes. Second, for our
employees, DiamondCluster will provide the best opportunity for growth and
challenge. We'll have the best clients and most interesting work. For
investors, the formation of DiamondCluster will be cash EPS accretive and will
be a very strong platform for growth and profitability into the future.
We are all very enthusiastic about this combination. We are anxious to work
together to create the premier digital strategy and solutions delivery firm in
the market.
With that, I'd like to open the call to questions.
CLOSING REMARKS
Thank you all for joining us this morning. We are all very excited by this news
and by the opportunity it gives to our clients, to our people and to our
shareholders.
We'll see you all soon.
