Ad-hoc | 20 March 2002 10:29

BETA Systems Software english

Comment on takeover offer by Deutsche Balaton AG Ad-hoc-announcement transmitted by DGAP. The issuer is solely responsible for the content of this announcement. ——————————————————————————– Comment on takeover offer by Deutsche Balaton AG – Management Board and Supervisory Board recommend that shareholders reject offer Berlin, March 20, 2002 – The Management Board and Supervisory Board of Beta Systems Software AG (Neuer Markt, BSS) unanimously recommend that shareholders reject the takeover offer put forward by Deutsche Balaton AG pursuant to Section 27 in conjunction with Section 14 para. 3 WpÜG (Wertpapiererwerbs- und Übernahmegesetz) for the following principle reasons: – The offer fundamentally undervalues Beta Systems’ market value based on its market position, its financial strength and its prospects. – The “Eight Step” restructuring program already in place is producing measurable results. Deutsche Balaton AG offers no benefits or strategies describing how they would manage the process any differently. – Deutsche Balaton AG is only interested in Beta Systems as a ‘business proposition’, and has identified no synergies arising from the proposed takeover – in terms of technology, marketing, sales or any other area. – The stated objectives of Deutsche Balaton AG, that is, to safeguard its investment and achieve an increase in value, are corporate objectives already pursued by Beta Systems. end of ad-hoc-announcement (c)DGAP 20.03.2002 Issuer’s information/explanatory remarks concerning this ad-hoc-announcement: The proposed offer of a cash payment of Euro 3.10 per share is only orientated at the weighted average share price of the three month period preceding the publication of the intention of the takeover offer. However, this does not reflect an appropriate market value of Beta Systems Software AG. As of December 31, 2001, the company’s cash and cash equivalents amounted to Euro 13.7 million (Euro 3.44 per share). At the end of the first quarter, ending March 31, 2002, the company expects additional proceeds stemming from its maintenance and service activities that should increase cash and cash equivalents to over Euro 20 million (Euro 5.03 per share). Clearly, the cash value of Beta Systems alone exceeds the proposed offer. Another factor that should be considered when calculating a fair takeover price is the company’s positive cash flow, which in fiscal 2001 amounted to Euro 4.3 million. The Group’s net loss in fiscal 2001 was a result of non-cash adjustments to investments relating back to the years 1997-2000. Therefore, when these exceptional items are deducted, the company actually reached its profit threshold as early as 2001. Restructuring measures initiated by the new Management Board as part of the “Eight Step” turnaround program presented at the 2001 Annual Meeting of Shareholders have already borne fruit, facilitating a 9% revenue increase in fiscal 2001. Sales revenues of Euro 45.0 million in the 2001 fiscal year and a healthy 50% of total revenues generated by extremely stable maintenance and service activities – with long-term contracts and few terminations – represent a solid foundation for the future. The takeover offer fails to reflect these major operational achievements. Indeed, the offer has also disregarded the fact that Beta Systems has built a powerful customer base over a period spanning almost 20 years. Beta Systems has established a close rapport with more than 1000 large-scale companies and data centers. Moreover, the company possesses a dedicated team of highly qualified personnel, with sector-specific expertise in the field of Systems Management software. In addition, Beta Systems has created well-established brands such as VIDiDOC. Throughout the years, the company has also developed unique Beta Systems software solutions that have proven their competitive edge in a fast-track environment – more than 2000 customer installations attest to this. In the last ten months, Beta Systems has explained the progress being made through the turnaround program on numerous occasions. As part of its “Eight Step” program, the company has also enhanced its communication activities with the capital markets, thus strengthening the level of trust within the financial community and bolstering its stock market valuation. In this context, the company remains committed to its incisive action plan, such as the reacquisition of shares (so-called treasury stock) that has already been implemented. According to section XVIII. of the offer by Deutsche Balaton AG, the bidder has no intentions regarding the future location of key parts of the company, the use of assets and capital, future obligations, or employees and their representatives at the present time. In view of the given facts, the Supervisory and Management Boards of Beta Systems were not able to assess what the possible consequences of a successful takeover would be. Depending on who holds the actual controlling interest, the bidder may be able to govern, to a certain extent, the financial and operating policies of Beta Systems via the executive boards of the enterprise. After carefully examining the recent activities of the bidder, the Management Board and the Supervisory Board were unable to identify any synergies arising from the proposed takeover – in terms of technology, marketing, sales or any other area. The objectives of Deutsche Balaton AG, as a mere financial investor, are to safeguard its investment and achieve an increase in value – a corporate objective that is also pursued by Beta Systems. The Management Board and Supervisory Board are more determined and encouraged than ever in this respect, as the offer also underlines the attractiveness of an investment in Beta Systems at its current share price level. The Management Board and Supervisory Board, in so far as their members are also shareholders of the company, will not be accepting the proposal put forward by Deutsche Balaton AG under the existing conditions. Beta Systems’ financial foundation in terms of liquidity, coupled with assets such as its outstanding relationships with customers, well-established state-of-the-art products, ability to build customer loyalty through long-term service agreements and high- potential innovations, is worth far more than the offer put forward by Deutsche Balaton AG. Therefore, the Management Board and Supervisory Board recommend that existing shareholders of Beta Systems Software AG reject the proposed offer put forward by Deutsche Balaton AG – in order to be able to participate in the future success of the turnaround program already initiated by Beta Systems. Berlin, March 20, 2002, The Management Board. End of message