ATG to Acquire Primus Knowledge Solutions, Inc. Tuesday  (email this article)

CAMBRIDGE, Mass. & SEATTLE--(BUSINESS WIRE)--Aug. 10, 2004--ATG (Art Technology Group, Inc., NASDAQ: ARTG) the software provider behind the Web's richest customer experiences and Primus Knowledge Solutions (Company Profile, Past Stories, Case Studies), Inc. (NASDAQ: PKSI - News), an award-winning customer service software provider, today announced a definitive agreement for ATG to acquire Primus. Under the terms of the all stock deal, the transaction is valued at approximately $30 million to $33 million, based upon ATG's closing stock price as of August 9, 2004. For the 12 month period ended June 30, 2004, the two companies had combined revenue of more than $90 million. Cost synergies between the two companies are expected to result in between $10 million and $15 million in annual savings beginning in 2005. The transaction is expected to close during the fourth quarter of 2004 and be accretive to ATG's forecasted results for the full year 2005.

ATG's industry-leading software for online commerce and marketing combined with Primus' award-winning customer service software solutions will create one of the industry's largest online commerce and service software companies. The combination will produce the most complete consumer-facing platform to work seamlessly through Web, email, call center, and other channels.

"Companies want to market to, sell to and service their customers through a variety of channels and provide the most seamless, integrated experience for these customers," said Bob Burke, president and CEO of ATG. "Combining Primus' products and technical expertise with ATG creates an e-business powerhouse, with the breadth of technology and the critical mass that greatly enhances our ability to provide complete customer experience solutions across all channels."

ATG delivers a rich customer experience through integrated customer-facing marketing, selling and service applications. ATG software solutions include:

The commerce application used by more high-end Web sites than any other
The # 1 Scenario Personalization solution according to the Information Management Association. ATG Scenario Personalization(SM) is used by top performing Web sites including American Airlines, AT&T Wireless, Fidelity Investments, InterContinental Hotels Group (ranked the Best International Hotel Site), Neiman Marcus, and Wells Fargo to manage customer-facing business processes
Marketing solutions that uniquely integrate email and Web interactions, ranked among the top four in the industry by Gartner
Customer service technology that provides information that is more intelligent, personal and relevant Primus is a recognized leader in self- and assisted-service technologies. Its software solutions include:

The highest ranking solution in Web Self-Service suites from Gartner
Advanced email response management technology ranked # 1 by Gartner
Extensive knowledgebase and natural language processing search technology supporting call centers, help-desk staff, field service workers, wireless users and self-service sites
Call center problem resolution technology integrated with major CRM suites such as Siebel, PeopleSoft and Remedy

"The combination of ATG's commerce and marketing solutions with Primus' award-winning customer service and support technologies is a powerful and natural fit," said Michael Brochu, chairman, president and CEO of Primus. "This joint offering will provide enterprises with the industry's most integrated customer experience solution to power their e-business initiatives and is a win-win for our customers, shareholders, employees, and partners."

The acquisition creates a number of synergies on both the top and bottom line. The opportunity to sell integrated commerce and service solutions into each company's respective customer base provides ATG with significant revenue growth potential. On the expense side, the combination is expected to generate between $10 million and $15 million in annual savings beginning in 2005, through workforce synergies, facilities consolidation and the merger of accounting, legal and regulatory functions.

"Consolidation in the eService market is necessary as enterprises are looking for integrated multi-channel solutions that leverage all aspects of the customer service and support continuum," said Esteban Kolsky, senior research analyst, Gartner, Inc. "The combination of e-commerce and e-marketing with self- and assisted-service software solutions creates a necessary offering that enterprises today require to enhance the overall customer experience."

TERMS OF THE AGREEMENT
Under the terms of the agreement, ATG is acquiring all of the outstanding shares of Primus. Upon completion of the transaction Primus shareholders are expected to own approximately 30 percent to 32 percent of the combined company's outstanding stock on a fully diluted basis. The transaction is expected to be tax-free to Primus shareholders. Based upon ATG's latest closing stock price, and assuming expected exchange ratios in the range of 1.2976 to 1.4169 ATG shares for each diluted share of Primus, the transaction is valued at approximately $30 million to $33 million. The exchange ratio is subject to adjustment within this range based upon Primus' achievement of specified minimum cash and working capital requirements at closing, but in no event will the exchange ratio be less than 1.2976 ATG shares for each diluted share of Primus.

All directors and executive officers of Primus and certain other shareholders, owning in aggregate approximately 14.6% of Primus' outstanding shares, have signed an agreement to vote their shares in favor of the transaction. Both Primus' and ATG's boards of directors have unanimously approved the transaction. The transaction requires the approval of shareholders of both companies. Pending legal and regulatory review and shareholder approval, the transaction is expected to close during the fourth quarter of 2004.

As part of the transaction, ATG anticipates that it will be adding two members to its board of directors, bringing the total to nine board members. It is anticipated that Michael Brochu and Daniel Regis, chairman of Primus' audit committee, will become members of the board of directors of ATG.

SG Cowen is acting as exclusive financial advisor to ATG, and Broadview is acting as financial advisor to Primus in connection with this transaction.