Mercator, based in Wilton, Conn., said its board of directors had unanimously rejected the all-cash offer valued at nearly $75 million. The company said the proposal lacked financing and involved an "extremely risky" business plan.
"Our board does not believe that this dissident proposal is in the best interest of our stockholders," Roy King, Mercator's chairman and chief executive, said in a statement. "It is our opinion that these dissidents cannot successfully complete what is a highly conditional, unsolicited hostile transaction."
Strategic Software Holdings, which owns nearly 5 percent of Mercator's stock, extended its offer on Monday to purchased the entire company for $2.17 in cash per common Mercator share. The companies met Tuesday to discuss the bid.
"What is outrageous is that the dissidents even admitted at the meeting that they had not secured financing for the purported proposal and that they were not prepared to detail any other terms," King said in his statement.
Last month, Strategic Software Holdings disclosed a plan to replace Mercator's board of directors at Mercator's next annual meeting in May. King called that plan an attempt "to gain control of the board in order to sell the company to themselves as cheaply as possible."Mercator, which competes with IBM, Vitria and WebMethods, sells software designed to help companies stitch together incompatible business systems. Sales for that type of software has generally declined in the past two years as companies put the brakes on information technology investments.
The company has more than 1,100 customers, according to Mercator's Web site. In 2002, it posted a net loss of $29.4 million, or 86 cents per share, on nearly $112 million in sales. The company's shares closed down 7 percent on Friday, at $1.57.
Strategic Software Holdings was not immediately available to comment.