Filed by SmartForce Public Limited Company
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
Subject Company: SkillSoft Corporation
Commission File No. 000-28823
On June 11, 2002, SmartForce prepared the following document to answer
additional questions that may be asked by SmartForce employees related to the
planned merger between SkillSoft Corporation and a wholly owned subsidiary of
SmartForce:
What have we announced ?
We have just announced our intention to merge with SkillSoft in a "merger of
equals" transaction. These means that, rather than one company acquiring the
other, we are putting the two companies together as equal partners in a new
entity. SmartForce shareholders will receive a premium in the transaction of
approximately 30%, based on the most recent 30 days of trading. As a result,
following the merger, 58% of the equity of the combined company will be held by
SmartForce shareholders, and 42% by Skillsoft shareholders. The merger will be
structured as a merger of SkillSoft into a newly-formed SmartForce subsidiary
and accounted for as a purchase transaction.
The transaction is expected to close, following customary approvals, by the end
of the third quarter of 2002.
Why is this a good deal and why do SmartForce and SkillSoft make good merger
partners ?
This transaction, the largest of its kind in the e-Learning marketplace, brings
together the clear industry leaders in content and learning solutions. The
combined company will offer:
.. Full breadth of industry-leading IT, Enterprise Applications, Sales and
CRM, Business Skills, Interpersonal Skills and Management content
.. "Beyond Training" productivity and job-support applications such as
SmartForce SolutionSets and SkillSoft Referenceware
.. Leading market share, with well over half of the Global 5000 as customers
.. The largest sales and support force of any corporate e-Learning company
.. Industry leading technology and learning delivery/management platforms
.. The largest R&D group in the industry
.. Financial scale and critical mass
Customers are looking for a provider that can offer comprehensive e-Learning
solutions, and who brings financial stability and long-term dependability.
Together we are better positioned than any other player in the market to be
their long-term partner for all e-Learning needs.
Long-term the combined company will enjoy substantial cost synergies and
tremendous distribution leverage. We see strong cross-sell opportunities in our
combined global customer base where customers are looking for a single source,
comprehensive e-Learning solution provider.
Although no integration is easy, we are confident in our ability to integrate
the companies with minimal disruption due to our familiarity with each other's
business models, compatible corporate cultures and shared direct sales approach.
The combined
company brings together the strategic vision of the founders of e-Learning with
one of the most experienced execution teams in the e-Learning marketplace.
Why is this merger happening at this time ?
e-Learning is an industry that is poised for consolidation, and many companies
are at inflection points in terms of both investor confidence and solution
offerings. We intend to be a leader in this consolidation phase, not a follower.
This transaction allows us to clearly define ourselves as the industry leader
with the only comprehensive range of e-Learning solutions across most critical
enterprise functions and business processes.
While both companies have considered several other opportunities for
consolidation, this is the combination that both companies agree has the most
potential for success.
In addition we believe that, given the current challenging market environment,
this is precisely the time to consolidate and prepare for disproportionate
potential gains as the market begins to stabilize and return to growth.
Why does this deal make more sense than the recently-terminated
SmartForce/Centra deal ?
The primary difference between this deal and the SmartForce/Centra transaction
is that it is a merger of two companies in a broadly similar business -
e-Learning solutions - who have both evolved from a predominantly
content-focused background, versus integration with Centra who are a
technology/infrastructure company. We believe there is much more obvious and
immediate synergy with SkillSoft in terms of product offerings with a reduced
dependence on technical integration. A merger with SkillSoft therefore leverages
the core content aspect of each business to create the industry's most
comprehensive solutions.
Does this mean that we will be a content-only company going forward?
No. Content has always been a core focus for both companies, as indeed it is a
core focus for the e-Learning industry and for customers' e-Learning initiatives
at large. Content, after all, is what provides the ultimate delivery of
knowledge and skills transfer.
However, both companies have always recognized the importance of the other key
components of a successful e-Learning solution or initiative - enabling
technologies, supporting software, custom content, customization capabilities
and e-Learning services offerings - and we have individually pursued strategies
(in-house development, alliance, partnership, acquisition, etc.) to ensure that
we can offer comprehensive, high-quality and high-value solutions. This focus
will continue and expand.
Who will comprise the Management team of the new company ?
We firmly believe that this merger brings together a management team with the
best track-record and most extensive experience in this industry, arguably the
only team with experience in building and sustaining successful e-Learning
businesses. This is the intended executive team, and their respective roles:
Greg Priest, Chairman and Chief Strategy Officer (SMTF)
Chuck Moran, President and CEO (SKIL)
Tom McDonald, EVP and CFO (SKIL)
Jeff Newton, EVP of Complex Solutions (SMTF)
Jerry Nine, EVP of Content Solutions (SKIL)
Paul Henry, EVP of Corporate Marketing and Customer Service (SMTF)
Colm Darcy, EVP of Content Development (SMTF)
Mark Townsend, EVP of Software Development (SKIL)
What do we see as the main areas for potential with this merger ?
First, there are clear cross-sell and up-sell opportunities. Of the SmartForce
customer base of some 2,500 corporate customers, only about 200 are currently
Skillsoft customers. This obviously gives us access to over 2,000 SmartForce
customers who will have potential interest in new content and learning solutions
based on SkillSoft's offerings.
Similarly, SkillSoft has about 300 customers who do not use SmartForce, so
there is further potential here.
We believe that the combined operation will have by far the broadest offering of
e-Learning solutions in the industry. SmartForce's historic strength is in IT,
with recent strength in the sales and CRM arenas. SkillSoft's historic strength
is in interpersonal and management skills. Between the two of us, we will have
by far the industry's strongest and comprehensive corporate e-Learning offering.
This, we believe, will allow us to potentially capture a far greater share of
corporate spend on learning and training solutions.
We also believe that the combination of assets - content, technology and
services - of the two companies will give us scope to further develop our
"beyond training" applications - SolutionSets from SmartForce and Referenceware
(Books24x7) from SkillSoft - and to jointly develop brand new offerings, in new
solution areas, that leverage these assets.
How, in broad terms, will the integration be handled ?
During the period from now to the close of the transaction (anticipated late Q3,
2002), we will continue to operate as separate companies. We have already had
executives from both companies working to determine how we will bring our
companies together and have made substantial progress. Over the period from now
until the closing, we will
work to fill out an even more detailed integration plan to address specific
plans across all of the functional areas - development, sales, marketing,
support, finance and administration.
It is too early to announce specific plans, but our intent is that we will
continue, through Q4 this year, to sell and support our customer bases
independently, but seek to leverage cross-sell and up-sell opportunities during
this period. On this basis a tighter integration of the two companies will take
place from 2003.
As part of the integration it is intended that we will extend our 2002 sales
year to January 31, 2003 coincide with SkillSoft's sales year.
Where will the combined operation be headquartered?
Corporate headquarters will continue to be in Dublin, Ireland. US Headquarters
will move to Nashua, NH where Chuck Moran, CEO and Tom McDonald, CFO are based.
Redwood City, CA will however remain an important center, and will be where the
Complex Solution sales business, Content Development, Corporate Marketing and
Customer Services groups are headquartered.
How does this transaction affect any of our existing content, distribution or
technology partnerships? Will there be any specific relationships the combined
company can leverage that are not possible today?
We anticipate that most of our respective, existing partnerships will continue.
We do not envisage any potential new partnerships only now becoming a
possibility, but we will clearly represent a "powerhouse" in the industry that
may give us an extra "edge" in forging such alliances. This merger clearly
underscores the commitment we have made to openness, interoperability and
superior learning experience as key focus areas for development.
How many employees will the combined operation have?
SkillSoft has 314 employees, and SmartForce has 1,481, creating a total combined
workforce of 1,795.
Will the company name change?
It is our current intent to select a new name for the combined company. Various
alternatives are currently being examined, and a final decision on the new name
has not been made.
What will happen to my stock and stock options?
SmartForce stock will be the surviving stock in this merger, so you will
continue to own any stock, or stock options granted to you, exactly as before.
Do you expect there to be job cuts as part of the merger?
Obviously there will be some clear synergies expected as a result of the merger.
While many of these will be in terms of the increased revenue opportunities we
anticipate, there will also be some areas of duplication in our cost base that
we may need to address.
It should be stressed that the level of cost reductions we need to make will be
determined, in large part, by the anticipated timing and extent of the
turnaround in the economy, by our sales (revenue and contract value) success in
the coming weeks and months and by the speed at which we can start to see the
revenue upside synergies that we believe now become an opportunity for us with
this merger.
What do I do if I am engaged in an existing sales situation competing against
SKIL?
During the period from now to the close of the deal (anticipated late Q3, 2002)
we will continue to operate as separate companies at both the sales and
operational levels. You should therefore effectively behave as if there were no
intended merger, and compete for customer and prospect deals as you would prior
to the announcement yesterday. To the extent that we compete, SmartForce,
SkillSoft and their respective employees are under a remaining obligation under
the antitrust laws to continue to aggressively compete for sales.
Upon the close of the transaction we will provide further guidance for any
competitive situations, should they arise, and communicate details of any
co-operation alliances that are then put in place.
If anything changes in respect of the above it will be fully communicated at
that time.
Why did we (SMTF) opt to do this deal now, at a point in out history where the
valuation of the company is so low?
We have talked many times in the past about "defining moments", inflection
points and the challenges of adversity. The current point in time reflects such
a moment. And we have chosen to be bold and innovative in our approach. Rather
than the long, hard "slog" to share price recovery that would be the more
conventional and conservative approach, we have chosen this point in time to
rewrite some of the rules within our industry and "break through" into a new
paradigm, one that we believe could radically change not only the shape of our
respective companies but also the industry as a whole.
Additionally, we firmly believe that now, while the market is somewhat
depressed, is the perfect time to position ourselves, and to build the "go
forward" organization, that will be positioned for disproportionate success as
the economy generally, and the corporate learning market specifically, start to
recover.
What about communicating to our customers ?
An email has been sent to from Greg to all of our customers logged in Siebel.
We have also set up a merger information piece on the website -
www.smartforce.com - to where any requests for information should be directed.
You can feel free to communicate anything in this email, or anything made
available publicly through the website, to any of your customer contacts.
As usual, however, if there are specific customer questions, or questions from
press or analysts, that fall outside of what's covered in these documents,
please direct them initially to me at paul_henry@smartforce.com.
Paul Henry
Executive Vice President
SmartForce - Learning Solutions for the Human Enterprise
Tel: + 1 650 817 5873
Fax: + 1 650 817 5887
e-mail: paul_henry@smartforce.com
www.smartforce.com
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Additional Information And Where To Find It
SmartForce intends to file a registration statement on Form S-4 in connection
with the transaction, and SmartForce and SkillSoft intend to mail a joint proxy
statement/prospectus to their respective stockholders in connection with the
transaction. Investors and security holders of SmartForce and SkillSoft are
urged to read the joint proxy statement/prospectus when it becomes available
because it will contain important information about SmartForce, SkillSoft and
the transaction. Investors and security holders may obtain a free copy of the
joint proxy statement/prospectus (when it is available) at the SEC's web site at
www.sec.gov. A free copy of the joint proxy statement/prospectus may also be
obtained from SmartForce or SkillSoft. SmartForce
and its executive officers and directors may be deemed to be participants in the
solicitation of proxies from the stockholders of SmartForce and SkillSoft in
favor of the transaction. SkillSoft and its executive officers and directors may
be deemed to be participants in the solicitation of proxies from the
stockholders of SmartForce and SkillSoft in favor of the transaction.As of May
31, 2002, SmartForce's directors and executive officers beneficially owned
approximately 4.5 percent of SmartForce's outstanding voting stock. Information
regarding SkillSoft's executive officers is contained in SkillSoft's Form 10-K
for the year ended January 31, 2002 and its proxy statement dated May 13, 2002,
which are filed with the SEC. As of May 31, 2002, SkillSoft's directors and
executive officers beneficially owned approximately 43 percent of SkillSoft's
outstanding common stock. A description of employment agreements and other
interests of the SmartForce and SkillSoft directors and officers will be
available in the Registration Statement and the Join Proxy Statement/Prospectus.
In addition to the registration statement on Form S-4 to be filed by SmartForce
in connection with the transaction, and the joint proxy statement/prospectus to
be mailed to the stockholders of SmartForce and SkillSoft in connection with the
transaction, each of SmartForce and SkillSoft file annual, quarterly and special
reports, proxy and information statements, and other information with the SEC.
Investors may read and copy any of these reports, statements and other
information at the SEC's public reference rooms located at 450 5th Street, N.W.,
Washington, D.C., 20549, or any of the SEC's other public reference rooms.
Investors should call the SEC at 1-800-SEC-0330 for further information on these
public reference rooms. The reports, statements and other information filed by
SmartForce and SkillSoft with the SEC are also available for free at the SEC's
web site at www.sec.gov. A free copy of these reports, statements and other
information may also be obtained from SmartForce or SkillSoft.
Forward Looking Statements
This document contains forward-looking statements within the meaning of 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 expected
synergies, the effect of the merger on long-term customer and shareholder value,
the ability to grow revenues and profits, the return on training investments for
the companies' customers, timing of closing, industry ranking, execution of
integration plans, management and organizational structure, the name of the
combined company, and the tax effect to the shareholders of both companies. All
forward-looking statements in this document are subject to risks, uncertainties
and assumptions that could cause actual results or events to differ materially
from those contained in the forward-looking statements. The factors that could
cause actual results or events to differ include, but are not limited to, the
possibility that the market for the sale of certain products and services may
not develop as expected, that development of these products and services may not
proceed as planned, that the transaction does not close, that the companies may
be required to modify aspects of the transaction to achieve regulatory approval,
that prior to the closing of the proposed merger, the businesses of the
companies suffer due to uncertainty, that the parties opt for a different name
for the combined company or that the parties are unable to transition customers,
successfully execute their integration strategies, or achieve planned synergies.
Additional factors that could cause actual results or events to differ
materially from those in the forward-looking statements are included in
SmartForce's and SkillSoft's filings with the Securities and Exchange
Commission, specifically SmartForce's annual report on Form 10-K for the year
ended December 31,
2001, SkillSoft's quarterly report on Form 10-Q for the quarter ended April 30,
2002, and subsequently filed reports. The forward-looking information provided
by SmartForce in this document represents SmartForce's views as of June 11,
2002. SmartForce anticipates that subsequent events and developments may cause
these views to change. However, while SmartForce may elect to update this
forward-looking information at some point in the future, SmartForce specifically
disclaims any obligation to do so. This forward-looking information should not
be relied upon as representing SmartForce's views at any date subsequent to the
date of this document.