Page 6 of 9 – SEC Filing
| Item 4. | Purpose of Transaction. |
Item 4 of the Schedule
13D is supplemented and superseded, as the case may be, as follows:
On September 15, 2017,
the Reporting Persons delivered a letter and presentation titled “The Case for Strategic Change at Progress Software”
to the Issuer’s Board of Directors (the “Board”) expressing their concerns with the performance of the Issuer
under the direction of its management team and Board, which have overseen the destruction of significant shareholder value, and
outlining the opportunities that they believe are available to unlock substantial value at the Issuer for the benefit of all shareholders.
In both the letter and accompanying presentation, the Reporting Persons call on the Board to finally acknowledge that the Issuer
is on a deeply flawed strategic path and begin a formal process to reset the Issuer’s strategy and refresh the Board. A copy
of the letter and presentation are attached hereto as exhibit 99.1 and exhibit 99.2, respectively and are incorporated herein by
reference.
In the letter, the
Reporting Persons state that they have gone to great lengths to constructively engage with the Board regarding a number of their
ideas to unlock value at the Issuer, which they presented to the Board, but that their attempts at good faith engagement have
been met with a series of obstructive tactics and delays. The Reporting Persons expressed their disappointment that the Issuer
has chosen to publicly reject the compelling acquisition opportunity they presented, which the Reporting Persons believe the Board
did not adequately consider, by issuing a letter to shareholders of the Issuer rather than continuing to engage privately with
the Reporting Persons regarding their ideas to unlock substantial value.
The Reporting Persons
also explain in the letter that the Issuer’s current strategy of engaging in highly speculative acquisitions to fuel growth
has resulted in the loss of hundreds of millions of dollars of shareholders’ capital. The Reporting Persons explain that
one of the reasons the Board has seemingly failed in its duty to act as responsible stewards for shareholder capital is a fundamental
lack of alignment of interests with shareholders given the Board’s collective ownership of only 1.26% of the Issuer’s
outstanding shares, together with the Board members’ selling of shares into buybacks of the Issuer that they authorized.
In the letter, the Reporting Persons state that they have retained Mark Fusco and John Shackleton, two of the most respected CEOs
in the software industry, as advisors to work with the Reporting Persons and provide guidance on how best to drive value at the
Issuer.
In the presentation
that accompanied the letter to the Board, the Reporting Persons elaborate on the Issuer’s failed M&A and organic growth
strategies and the Issuer’s resulting prolonged underperformance. The Reporting Persons provide a comprehensive timeline
and analysis illustrating the various flaws and missteps undertaken by management and the Board in executing these failed strategies.
The presentation also expands on the Reporting Persons’ recommendations to reset the Issuer’s strategy and business
model, including through comprehensive case-studies, to help refocus the Issuer and drive shareholder value. The Reporting Persons
demonstrate that by operating the business more efficiently and cutting its bloated cost structure, they believe shareholders
could realize over $55 per share of the Issuer today without any incremental multiple expansion.
As such, the Reporting Persons demand that the Board immediately take the following actions: (1) Jack Egan
to resign as Chairman of the Board; (2) cease the current acquisition strategy directed by CEO Yogesh Gupta and the Board; (3)
add five new Board members as follows: (i) three highly-qualified individuals identified by the Reporting Persons – John Shackleton
(former President & CEO, Open Text), Mark Fusco (former President & CEO, Aspen Technology) and Russ Stuebing (former VP
of Corporate Development, OpenText and former VP of Corporate Development, Equifax) – whose biographies are included in the letter
and presentation; (ii) a Praesidium representative; and (iii) an additional highly-qualified individual to be identified by the
Reporting Persons shortly; and (4) seriously engage with the Reporting Persons on ways to initiate a formal process to reset the
Issuer’s failed strategy and adopt a low-risk, repeatable, proven strategy of operating efficiently, maximizing cash flow,
and focusing on return on investment.
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