Voss Capital Sends Letter to Rosetta Stone Board of Directors
July 21 2020 - 9:00AM
Business Wire
Encouraged by Recent Reports that Rosetta Stone
Has Retained Financial Advisors to Explore a Sale of All or Part of
the Company
Believes Optimal Way to Maximize Shareholder
Value is Through Sale of Lexia Business Segment or Entire
Company
Will Hold Board Accountable if Sale Process is
Not Pursued with Rigor and Urgency
Voss Capital, LLC (“Voss”), a significant shareholder of Rosetta
Stone (“NYSE: RST” or the “Company”) today issued a public letter
to the Company’s Board of Directors (“the Board”). The full text of
the letter is below:
July 21, 2020 Rosetta Stone Board of Directors 1621 N. Kent
Street Arlington, VA 22209
Dear Members of the Board:
As you know, Voss Capital, LLC (“Voss”) has been a shareholder
of Rosetta Stone (“NYSE: RST” or the “Company”) for many years.
More recently we have made clear to management and the Board of
Directors (“the Board”) that we believe the Company has been
meaningfully undervalued in the public markets, and that the best
way to maximize value for shareholders is through a sale of the
Language and Literacy segments separately, or the entire
company.
We have appreciated your willingness to engage with us, yet at
the same time we have been disappointed by what we perceived as a
lack of urgency around pursuing a true strategic review. Given the
high valuations of recent comparable transactions, the increasingly
prominent role of the education technology sector against the
backdrop of the Covid-19 pandemic, and the strong growth in
bookings the Lexia business has been experiencing, it is clear to
us that now is the time to capitalize on the incredible value of
Rosetta Stone. It is also clear that a failure to take advantage of
these favorable dynamics could represent a missed opportunity for
your shareholders.
Therefore, we were encouraged to read the July 17th Bloomberg
story reporting that you have retained financial advisors to
explore a sale of part or all of the Company. The report noted that
you were “gauging interest” from both financial and strategic
buyers. We are confident there are several suitors who would be
interested in a transaction. Hopefully, as part of this strategic
review process, each of them is getting a chance to convey to you
and your advisors what the dollar value of that interest might
be.
We know that several other shareholders have previously
expressed to you that a transaction is the best path forward for
the Company. The stock closing 25% higher on the day of the
publication of the strategic review news demonstrates that this
viewpoint is widely held among the investment community.
With all of this said, last week’s story also reported that you
may “choose to remain independent.” While we know that to some
degree maintaining this optionality is a box companies must check
when exploring alternatives, we hope that is all it is.
Given Rosetta Stone’s track record over the past few years, we
feel it would be highly disappointing – and could destroy any
remaining confidence shareholders have in the Board – if the
decision were ultimately made to maintain the status quo. This
would be particularly perplexing given that we believe the market
agrees with us that there are numerous buyers out there willing to
pay fair value in a transaction.
We are currently operating under the belief that you have every
intention of acting in the best interests of all shareholders and
conducting this process with integrity and urgency. However, should
we be proven wrong, either by you failing to explore all viable and
available transactions, or by agreeing to one that drastically
discounts the value of Rosetta Stone, we – and, we believe, our
fellow shareholders – will not hesitate to hold you
accountable.
We look forward to a positive outcome of this strategic review
and a brighter future for Rosetta Stone.
Sincerely, Travis Cocke Chief Investment Officer Voss
Capital
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version on businesswire.com: https://www.businesswire.com/news/home/20200721005553/en/
Media: Sloane & Company Dan Zacchei / Joe Germani
dzacchei@sloanepr.com / jgermani@sloanepr.com
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