Emancipation Capital backs fellow shareholder's bid for Captaris

By Lisa Kerner

Charlotte, N.C., March 27 - Captaris, Inc. investor Emancipation Capital urged the company to "fully negotiate with Vector Capital and accept terms" that Emancipation said maximize value for all shareholders.

Emancipation, with a 6.65% stake in Captaris, made its request in a Wednesday letter to the company's board of directors included as part of a schedule 13D filing with the Securities and Exchange Commission.

It was previously reported that Vector Capital made an unsolicited offer to acquire all of Captaris' outstanding shares for $4.75 per share.

Captaris said a special committee of independent board members will evaluate the proposal as part of its evaluation of strategic alternatives. In a Thursday letter, Captaris once again invited Vector Capital to participate in the review process "on a fair and equal basis" with other potential bidders. The letter was included in a company news release.

Vector Capital, a 10.2% shareholder, in a prior statement accused Captaris of using the strategic review process as a delaying tactic and questioned the company's commitment to completing the process "expeditiously."

Emancipation said it disagrees with Captaris that having an agreement with Vector Capital that includes a go-shop provision may dissuade other potential acquirers.

Vector Capital capped its request for reimbursed expenses at $1 million, or $0.04 per share, and offered a shortened due-diligence timeline, both of which are reasonable, Emancipation said.

However, Emancipation encouraged Captaris to seek a higher price and lengthened go-shop period, 45 or 60 days versus the current 30 days, before making an agreement with Vector Capital.

"By entering in to an agreement with Vector Capital, your shareholders are assured of a price premium, have a reasonable probability of yet a higher price, and have eliminated the risk of a failed auction," the Emancipation letter, signed by managing member Charles Frumberg, said.

Captaris, based in Bellevue, Wash., develops software products that manage documents electronically and automate business processes.

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