SCHEDULE 14A INFORMATION
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Wallace Computer Services
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(Name of Registrant as Specified In Its Charter)
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[Logo] Wallace
October 29, 1996
Dear Shareholder:
As an institutional investor, you are no doubt aware that the annual meeting
for Wallace Computer Services will be held next Wednesday, November 6. You
have also likely spent some time considering two by-law proposals by Mr.
Wyser-Pratte, and have heard him espouse his views on shareholder rights.
Whether or not you generally support expanding shareholders' voices in
corporate affairs, the tender offer by-law proposal put forth by Wyser-Pratte
goes too far, and is not in the best interests of you or any other
shareholder except the arbitrageurs. Consider the likely scenarios and
outcome of a hostile takeover attempt if Wyser-Pratte's tender offer by-law
is adopted:
-- Wyser-Pratte's 90-day, drop-your-gloves clause destroys the
Board's negotiating power. A hostile bidder would have
absolutely no incentive to negotiate or reason to raise its
offer. The bidder could stonewall any negotiating attempts by
the Board, knowing that it merely has to wait 90 days to buy
the company at a lower price than the Board could negotiate.
-- Wyser-Pratte's proposed by-law sets an artificially low
premium hurdle of 25%. This condition, along with the 90-day
termination clause, effectively assures that Wallace
shareholders would receive only a 25% premium, AND NOTHING MORE,
even though the average takeover premium for the industry is
higher, and Wallace is recognized by analysts as one of the
standouts in the industry.
-- The by-law is unworkable from the perspective of maximizing
shareholder value because the 90-day time limit is inadequate.
The Board, even if determined to seek a high offer, would be
unable to effectively negotiate the sale of the company and at
the same time solicit proxies to enable them to continue to do
so.
INFORMATION MANAGEMENT PRODUCTS, SERVICES, SOLUTIONS.
-- This by-law proposal would make it practically impossible to
keep the company independent, even if that were the best
alternative for shareholders. Wyser-Pratte says that the Board
can try to "convince" shareholders that remaining independent
is right. However, to do this, the Board would almost
certainly have to disclose confidential information about
future strategies and prospects that would harm the company
and benefit competitors.
For example, a major software application might be in
development and a year away from introduction. The Board could
not reveal this information to shareholders without destroying
its competitive advantage and all future earnings and
shareholder value that would be generated. Similarly, any
acquisitions, strategic alliances or major new customers in
development would be equally compromised.
The net effect of this by-law is that if a hostile offer is made, the company
is very likely to be sold, and SOLD CHEAP, substantially below full value and
without an appropriate control premium for you.
Wyser-Pratte is only interested in his own agenda, not generating full, fair
value for all investors. Think about his motives for this proxy battle and
the by-law changes he has put forward. He wants you to vote for these
proposals to give him and his fellow takeover speculators MORE POWER AND
CONTROL in hostile takeovers.
Arbitrageurs actively talk among themselves and often vote as one block.
Wyser-Pratte knows that other investors are less structured in their approach
to tender offers, and less homogenous in their voting and tendering. Based on
that, Wyser-Pratte knows that this by-law proposal, if adopted, will give him
and his fellow speculators a significant advantage in a takeover fight. This
is particularly true since Wyser-Pratte's proposal permits a takeover bidder
to vote all of its shares against the company's continued resistance. Thus a
takeover bidder with a substantial holding in the company's stock could,
along with the arbitrageurs, force a sale of the company whether or not it was
advantageous to the other shareholders.
We request that you do not vote for Wyser-Pratte's nominees and his by-law
proposals. If you have already done so and hold you shares in the name of a
bank, broker or other nominee, please direct the party responsible for your
accounts to vote the WHITE proxy card as recommended by management.
Sincerely,
/s/ Ted Dimitriou /s/ Bob Cronin
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Ted Dimitriou Bob Cronin
Chairman of the Board President and CEO