Transaction Follows Thorough Market Assessment
Following Receipt of Unsolicited Proposal
Vote "FOR" the Company's Two Independent and
Highly Qualified Director Nominees on the WHITE Proxy Card to
Ensure You Receive Maximum Value For Your Virtusa Shares As Soon As
Possible
Virtusa Corporation (NASDAQ GS: VRTU) (the “Company”), a leading
IT services provider that enables the digital transformation of
Global 2000 enterprises by imagining, building and implementing the
end-to-end technology solutions that are essential to compete in a
digital-first world, today mailed a letter to shareholders related
to the transaction with Baring Private Equity Asia (BPEA) announced
on September 10, 2020. The letter reiterates that the BPEA
transaction delivers maximum and certain value to shareholders. It
also highlights the needless potential distraction and delay to
realizing this value that could arise if shareholders fail to
re-elect the Company’s two highly qualified directors candidates –
Al-Noor Ramji and Joseph Doody – at the Company’s 2020 Annual
Meeting of Stockholders. The full text of the letter follows.
VOTE THE WHITE
PROXY CARD TO RE-ELECT VIRTUSA DIRECTORS AL-NOOR RAMJI AND JOSEPH
DOODY TO ENSURE YOU RECEIVE MAXIMUM VALUE FOR YOUR INVESTMENT AS
SOON AS POSSIBLE
Dear Fellow Shareholder,
At Virtusa’s upcoming 2020 Annual Meeting of Stockholders on
October 2nd (the “2020 Annual Meeting”), you will face an
important, but clear, choice about the future value of your
investment in our Company: the realization of maximum and certain
return as soon as possible – $51.35 per share in cash – or the
likelihood of disruption in the boardroom that could potentially
delay your chance to receive that return on your investment.
The BPEA Transaction Delivers Maximum and
Certain Shareholder Value
On September 10, 2020, Virtusa announced that funds affiliated
with Baring Private Equity Asia (BPEA) will acquire all outstanding
shares of common stock of Virtusa for $51.35 per share in an
all-cash transaction valued at approximately $2.0 billion. While
New Mountain Capital (NMC) may try to convince you otherwise, this
compelling transaction that your Board negotiated and unanimously
approved will deliver to you a maximum and certain return on your
investment at a time of likely continued economic uncertainty.
The all-cash consideration represents:
- A premium of approximately 27 percent to the closing
price of Virtusa common stock on September 9, 2020, the last
trading day prior to the transaction announcement;
- Premiums of approximately 29 percent and 46 percent to
Virtusa’s volume-weighted average prices (“VWAP”) for the last 30
and 60 trading days, respectively; and,
- A valuation of 16.2x Firm Value / Last Twelve Months
EBITDA as of June 30, 2020 – a premium valuation made all the
more compelling by the volatile and risky macroeconomic and equity
market environment.
Consistent with our longstanding commitment and fiduciary duty
to maximize shareholder value, the transaction is the culmination
of a thorough market assessment that included engagement with both
strategic and financial parties following the receipt of an
unsolicited proposal to acquire the Company. As part of this
process, the Company signed non-disclosure agreements with five
parties and engaged with two others. After an independent, robust
review of the alternatives available, including the value creation
opportunity through continued execution of the Company’s strategic
plan, we unanimously determined that the all-cash premium
transaction with BPEA for $51.35 per share in cash maximizes value
for you, our shareholders. In addition, if we did not truly believe
this transaction would deliver maximum shareholder value, why would
one of our directors, who also holds a 10 percent effective
interest in the Company, support it?
However, we’re not asking you just to take our word for it –
several independent analysts agree that our market assessment was
comprehensive and rigorous and that the BPEA transaction maximizes
value:1
“With this under consideration, as well as
VRTU’s announcement that the Board conducted a thorough strategic
review of alternatives which included signing NDA’s with five
interested parties before determining that the Baring Private
Equity Asia offer provided the best value for shareholders, we
believe this is the best path forward for shareholders.” –
Needham
“Given management’s comprehensive process,
including signing nondisclosure agreements with five parties and
engaging two others, and the premium associated with the
transaction, we do not expect to see additional competitive
bidders.” – William Blair
“Deal value appears fair relative to prior
similar transactions (LXFT). Virtusa consummated a detailed process
over 1.5 months that engaged 7 potential suitors (5 signing NDAs).”
– Cowen
Failing to Re-Elect our Highly Qualified
Director Nominees – Al-Noor Ramji and Joseph Doody – Puts Maximum
and Certain Value at Risk
Not supporting the re-election of our two nominees and electing
NMC’s nominees instead at our upcoming Annual Meeting would put
your investment return at risk.
As we’ve detailed in prior letters to you, NMC’s two candidates
do not have unique skills, qualifications or perspectives required
to add new value to our boardroom. Our Board already possesses
essentially all of the qualities that NMC’s candidates purportedly
would bring. We already have independent directors with deep IT
experience and industry pedigree, as well as significant
shareholder representation on our Board. We also carefully
evaluated NMC’s strategic and operational recommendations and
concluded that we were already addressing every one of them in the
execution of the Plan and the ordinary course leadership of
Virtusa.
Even more importantly, electing NMC’s candidates could
potentially delay your ability to maximize the value of your
investment through the BPEA transaction. NMC’s agenda is to gain
disproportionate influence over the Board, first by seeking to
control 20 percent of board seats (despite owning only
approximately 10 percent of the Company), and then by forming and
leading a “Business Optimization Committee” that would effectively
usurp the authority of the full Board of Directors. We strongly
believe that, if elected, NMC’s candidates would continue to pursue
NMC’s own agenda and could potentially seek to interfere with and
delay the closing of the value-maximizing BPEA transaction and your
receipt of $51.35 per share in cash. For example, NMC has made
vague assertions about exploring “whether alternative transactions
that are more beneficial to the Issuer’s shareholders are
available.” Given the thorough market assessment we conducted
before agreeing to the BPEA transaction, we are confident that
there is no better alternative available for our shareholders.
In summary, NMC’s insistence on continuing with this proxy
contest creates a needless distraction for our Company and
shareholders at a crucial time, especially considering that
shareholders will be voting separately on the merits of the BPEA
transaction at a future date and, in the interim, will not benefit
in any way from adding NMC candidates to our Board.
Ask yourself: Do I want maximum value
of $51.35 per share in cash sooner or later?
Independent market analysts agree that the sale process was
thorough, the resulting price fair and the timing is good given
ongoing macroeconomic uncertainties.
Support the experts and protect the value of your investment
by voting today on the enclosed WHITE proxy card "FOR" Al-Noor
Ramji and Joseph G. Doody, who will stand for re-election to the
Company’s Board of Directors at the 2020 Annual Meeting.
We further encourage you to discard any proxy materials you
receive from NMC, and remind you that returning their blue proxy
card, even as a protest vote, may cancel your earlier vote for your
Company’s director candidates. Only your latest dated proxy card
will be counted at the Annual Meeting.
The choice is clear, and time is of the essence.
Sincerely,
The Virtusa Board of Directors
If you have any questions, or
need assistance in voting your shares on the WHITE proxy card,
please call the firm assisting Virtusa with the solicitation of
proxies:
MacKenzie Partners,
Inc.
TOLL-FREE at +1 (800) 322-2885
or via Email: VRTU@mackenziepartners.com
About Virtusa
Virtusa Corporation (NASDAQ GS: VRTU) is a leading provider of
digital business strategy, digital engineering, and information
technology (IT) services and solutions that enable the digital
transformation of Global 2000 enterprises by imagining, building
and implementing the end-to-end technology solutions that are
essential to compete in a digital-first world. Virtusa partners
with the leading companies in the Banking, Financial Services,
Insurance, Healthcare, Communications, Media, Entertainment,
Travel, Manufacturing, and Technology industries.
Virtusa helps its clients accelerate their digital and overall
business transformation by providing multi-disciplinary agile teams
of consultants, designers, engineers and sophisticated gamified
tools. The company integrates its deep domain and digital
engineering expertise with proven assets and processes embedded in
its unique Digital Transformation Studio model, resulting in a
high-performance end to end delivery. Its core services include
consulting and system design, application engineering, analytics
and data, digital process automation, enterprise application
integration, cloud services and managed services.
Cautionary Information Regarding Forward-Looking
Statements
This communication contains certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended,
including statements regarding, management's forecast of financial
performance, the impact of the COVID-19 pandemic and related
economic conditions on our business and results of operations, the
growth of our business and management’s plans, objectives, and
strategies, the company’s ability to convert its pipeline into
profitable revenue growth, the company’s ability to diversify its
portfolio of industries, geographies and accounts, the company’s
ability to increase its operating margins, the company’s ability to
increase market share as a result of its Three Pillar Strategic
Plan, the company’s ability to generate long-term value for its
shareholders, the company’s financial performance and the impact of
its operational changes, including its completed acquisitions and
divestitures, the company’s operating leverage in pursuing growth
opportunities, and the company’s upcoming 2020 Annual Meeting of
Stockholders (the “2020 Annual Meeting”), uncertainties regarding
future actions that may be taken by New Mountain in furtherance of
its nomination of director candidates for election at the company’s
2020 Annual Meeting. These forward-looking statements include, but
are not limited to, plans, objectives, expectations and intentions
and other statements contained in this communication that are not
historical facts, and statements identified by words such as
“expects,” “anticipates,” “intends,” “plans,” “believes,” “see,”
“seeks,” “estimates,” “will,” “should,” “may,” “confident,”
“positions,” “look forward to,” and variations of such words or
words of similar meaning and the use of future dates. These
forward-looking statements reflect our current views about our
plans, intentions, expectations, strategies and prospects and
beliefs about the ability of our board of directors and management
to execute on our strategy and drive shareholder value, beliefs
about the ability of our board of directors and management to make
decisions in the best interest of the company and all shareholders,
which are based on the information currently available to us and on
assumptions we have made. Although we believe that our plans,
intentions, expectations, strategies and prospects as reflected in
or suggested by those forward-looking statements are reasonable, we
can give no assurance that these plans, intentions, expectations or
strategies will be attained or achieved. Furthermore, actual
results may differ materially from those described in the
forward-looking statements and will be affected by a variety of
risks and factors that are beyond our control including, without
limitation, those risks identified in Virtusa’s public filings with
the Securities and Exchange Commission (the “SEC”), including
Virtusa’s Annual Report on Form 10-K for the fiscal year ended
March 31, 2020, and subsequent filings with the SEC. Virtusa
disclaims any obligation to publicly update or revise any such
statements to reflect any change in expectations or in events,
conditions or circumstances on which any such statements may be
based, or that may affect the likelihood that actual results will
differ from those set forth in the forward-looking statements.
Important Stockholder Information
Virtusa filed with the Securities and Exchange Commission and
mailed to its stockholders a definitive proxy statement and
accompanying WHITE proxy cards in connection with the company’s
2020 Annual Meeting. The proxy statement contains important
information about the company, the 2020 Annual Meeting and related
matters. INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE PROXY
STATEMENT AND ANY OTHER RELEVANT SOLICITATION MATERIALS WHEN THEY
BECOME AVAILABLE BECAUSE THESE DOCUMENTS WILL CONTAIN IMPORTANT
INFORMATION. The company, its directors and certain of its
executive officers may be deemed to be participants in the
solicitation of proxies from the company’s stockholders in
connection with the matters to be considered at the company’s 2020
Annual Meeting. Information concerning the company’s directors and
executive officers is included in the proxy statement. The proxy
statement and other relevant solicitation materials (when they
become available), and any and all documents filed by the company
with the Securities and Exchange Commission, may be obtained by
investors and stockholders free of charge on the Securities and
Exchange Commission's web site at www.sec.gov. Copies will also be
available free of charge on the company's website at
www.virtusa.com.
1 Permission to quote neither sought nor granted.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200921005249/en/
Media: Conversion Marketing Ron Favali, 727-512-4490
ron@conversionam.com
Joele Frank, Wilkinson Brimmer Katcher Nick Lamplough / Clayton
Erwin (212) 355-4449
Investors: ICR William Maina, 646-277-1236
william.maina@icrinc.com
Additional Investors: MacKenzie Partners, Inc. Bob
Marese, 212-929-5405 bmarese@mackenziepartners.com
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