sc13d06297pro_01202012.htm

0000921895-12-000175.txt : 20120124 0000921895-12-000175.hdr.sgml : 20120124 20120124115503 ACCESSION NUMBER: 0000921895-12-000175 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20120124 DATE AS OF CHANGE: 20120124 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PROGRESS SOFTWARE CORP /MA CENTRAL INDEX KEY: 0000876167 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 042746201 STATE OF INCORPORATION: MA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-42022 FILM NUMBER: 12541309 BUSINESS ADDRESS: STREET 1: 14 OAK PARK CITY: BEDFORD STATE: MA ZIP: 01730 BUSINESS PHONE: 781-280-4473 MAIL ADDRESS: STREET 1: 14 OAK PARK DRIVE CITY: BEDFORD STATE: MA ZIP: 01730 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Starboard Value LP CENTRAL INDEX KEY: 0001517137 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 599 LEXINGTON AVENUE, 19TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: (212) 845-7977 MAIL ADDRESS: STREET 1: 599 LEXINGTON AVENUE, 19TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D 1 sc13d06297pro_01202012.htm SCHEDULE 13D sc13d06297pro_01202012.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

§ 240.13d-2(a)

(Amendment No. )1

Progress Software Corporation

(Name of Issuer)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

743312100

(CUSIP Number)

JEFFREY C. SMITH

STARBOARD VALUE LP

830 Third Avenue, 3rd Floor

New York, New York 10022

(212) 845-7977

STEVE WOLOSKY, ESQ.

OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP

Park Avenue Tower

65 East 55th Street

New York, New York 10022

(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

January 20, 2012

(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See § 240.13d-7 for other parties to whom copies are to be sent.

_______________

1 The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP NO. 743312100

1	NAME OF REPORTING PERSON STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION CAYMAN ISLANDS
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 1,784,358
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 1,784,358
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,784,358
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.8%
14	TYPE OF REPORTING PERSON CO

CUSIP NO. 743312100

1	NAME OF REPORTING PERSON STARBOARD VALUE AND OPPORTUNITY S LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 604,951
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 604,951
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 604,951
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Less than 1%
14	TYPE OF REPORTING PERSON OO

CUSIP NO. 743312100

1	NAME OF REPORTING PERSON STARBOARD VALUE LP
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 3,235,000
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 3,235,000
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,235,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.1%
14	TYPE OF REPORTING PERSON PN

CUSIP NO. 743312100

1	NAME OF REPORTING PERSON STARBOARD VALUE GP LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 3,235,000
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 3,235,000
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,235,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.1%
14	TYPE OF REPORTING PERSON OO

CUSIP NO. 743312100

1	NAME OF REPORTING PERSON STARBOARD PRINCIPAL CO LP
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 3,235,000
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 3,235,000
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,235,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.1%
14	TYPE OF REPORTING PERSON PN

CUSIP NO. 743312100

1	NAME OF REPORTING PERSON STARBOARD PRINCIPAL CO GP LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 3,235,000
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 3,235,000
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,235,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.1%
14	TYPE OF REPORTING PERSON OO

CUSIP NO. 743312100

1	NAME OF REPORTING PERSON JEFFREY C. SMITH
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER 3,235,000
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER 3,235,000
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,235,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.1%
14	TYPE OF REPORTING PERSON IN

CUSIP NO. 743312100

1	NAME OF REPORTING PERSON MARK MITCHELL
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER 3,235,000
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER 3,235,000
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,235,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.1%
14	TYPE OF REPORTING PERSON IN

CUSIP NO. 743312100

1	NAME OF REPORTING PERSON PETER A. FELD
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER 3,235,000
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER 3,235,000
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,235,000
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.1%
14	TYPE OF REPORTING PERSON IN

CUSIP NO. 743312100

The following constitutes the Schedule 13D filed by the undersigned (the “Schedule 13D”).

Item 1.

Security and Issuer.

This statement relates to the common stock, par value $0.01 per share (the “Shares”), of Progress Software Corporation (the “Issuer”). The address of the principal executive offices of the Issuer is 14 Oak Park, Bedford, Massachusetts 01730.

Item 2.

Identity and Background.

(a) This statement is filed by:

(i)

Starboard Value and Opportunity Master Fund Ltd, a Cayman Islands exempted company (“Starboard V&O Fund”), with respect to the Shares directly and beneficially owned by it;

(ii)

Starboard Value and Opportunity S LLC, a Delaware limited liability company (“Starboard LLC”), with respect to the Shares directly and beneficially owned by it;

(iii)

Starboard Value LP (“Starboard Value LP”), as the investment manager of Starboard V&O Fund and of a certain managed account (the “Starboard Value LP Account”) and the manager of Starboard LLC;

(iv)

Starboard Value GP LLC (“Starboard Value GP”), as the general partner of Starboard Value LP;

(v)

Starboard Principal Co LP (“Principal Co”), as a member of Starboard Value GP;

(vi)

Starboard Principal Co GP LLC (“Principal GP”), as the general partner of Principal Co;

(vii)

Jeffrey C. Smith, as a member of Principal GP and as a member of each of the Management Committee of Starboard Value GP and the Management Committee of Principal GP;

(viii)

Mark Mitchell, as a member of Principal GP and as a member of each of the Management Committee of Starboard Value GP and the Management Committee of Principal GP; and

(ix)

Peter A. Feld, as a member of Principal GP and as a member of each of the Management Committee of Starboard Value GP and the Management Committee of Principal GP.

Each of the foregoing is referred to as a “Reporting Person” and collectively as the “Reporting Persons.” Each of the Reporting Persons is party to that certain Joint Filing Agreement, as further described in Item 6. Accordingly, the Reporting Persons are hereby filing a joint Schedule 13D.

(b) The address of the principal office of each of Starboard LLC, Starboard Value LP, Starboard Value GP, Principal Co, Principal GP, and Messrs. Smith, Mitchell and Feld is 830 Third Avenue, 3rd Floor, New York, New York 10022. The address of the principal office of Starboard V&O Fund is c/o Citco Fund Services (Cayman Islands) Limited, Regatta Office Park, Windward 1, 2nd Floor, PO Box 31106, Grand Cayman KY1-1205, Cayman Islands. The officers and directors of Starboard V&O Fund and their principal occupations and business addresses are set forth on Schedule A and are incorporated by reference in this Item 2.

CUSIP NO. 743312100

(c) The principal business of Starboard V&O Fund is serving as a private investment fund. Starboard V&O Fund has been formed for the purpose of making equity investments and, on occasion, taking an active role in the management of portfolio companies in order to enhance shareholder value. Starboard LLC has been formed for the purpose of investing in securities and engaging in all related activities and transactions. Starboard Value LP provides investment advisory and management services and acts as the investment manager of Starboard V&O Fund and the Starboard Value LP Account and the manager of Starboard LLC. The principal business of Starboard Value GP is providing a full range of investment advisory, pension advisory and management services and serving as the general partner of Starboard Value LP. The principal business of Principal Co is providing investment advisory and management services. Principal Co is a member of Starboard Value GP. Principal GP serves as the general partner of Principal Co. Messrs. Smith, Mitchell and Feld serve as members of Principal GP and the members of each of the Management Committee of Starboard Value GP and the Management Committee of Principal GP.

(d) No Reporting Person, nor any person listed on Schedule A, annexed hereto, has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

(e) No Reporting Person, nor any person listed on Schedule A, annexed hereto, has, during the last five years, been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) Messrs. Smith, Mitchell and Feld are citizens of the United States of America. The citizenship of the persons listed on Schedule A is set forth therein.

Item 3.

Source and Amount of Funds or Other Consideration.

The Shares purchased by each of Starboard V&O Fund and Starboard LLC and held in the Starboard Value LP Account were purchased with working capital (which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business) in open market purchases, except as otherwise noted, as set forth in Schedule B, which is incorporated by reference herein. The aggregate purchase price of the 1,784,358 Shares beneficially owned by Starboard V&O Fund is approximately $33,292,295, excluding brokerage commissions. The aggregate purchase price of the 604,951 Shares beneficially owned by Starboard LLC is approximately $11,321,316, excluding brokerage commissions. The aggregate purchase price of the 845,691 Shares held in the Starboard Value LP Account is approximately $16,124,737, excluding brokerage commissions.

Item 4.

Purpose of Transaction.

The Reporting Persons originally purchased the Shares based on the Reporting Persons’ belief that the Shares, when purchased, were undervalued and represented an attractive investment opportunity. Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of Shares at prices that would make the purchase or sale of Shares desirable, the Reporting Persons may endeavor to increase or decrease their position in the Issuer through, among other things, the purchase or sale of Shares on the open market or in private transactions or otherwise, on such terms and at such times as the Reporting Persons may deem advisable.

CUSIP NO. 743312100

On January 24, 2012, Starboard Value LP delivered a letter to the Issuer’s President and CEO, Jay Bhatt, and the Board of Directors (the “Board”). In the letter, the Reporting Persons stated their belief that the Issuer is deeply undervalued, and at its current price, the Issuer’s Application Development Platforms (ADP) segment alone is worth as much as, if not more than, the entire market value of the Issuer. The Reporting Persons believe this valuation discrepancy is, in part, due to the Issuer’s conglomerate structure consisting of a highly profitable mature business along with a money-losing growth business with little to no overlap. The Reporting Persons also provided an analysis of each of the Issuer’s businesses and product lines to highlight their serious concern that the current market price of the Issuer fails to reflect the value of the sum-of-its-parts. The Reporting Persons did recognize in the letter that Mr. Bhatt only recently assumed the CEO position and stated that they hope to work with Mr. Bhatt and the Board to explore ways to unlock value at the Issuer for the benefit of all shareholders.

A copy of the letter is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

No Reporting Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D except as set forth herein or such as would occur upon completion of any of the actions discussed herein. The Reporting Persons intend to review their investment in the Issuer on a continuing basis. Depending on various factors including, without limitation, the Issuer’s financial position and investment strategy, the price levels of the Shares, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, engaging in communications with management and the Board of the Issuer, engaging in discussions with third parties about the Issuer and the Reporting Persons’ investment, making proposals to the Issuer concerning changes to the capitalization, ownership structure, board structure (including seeking board representation or the annual election of directors) or operations of the Issuer, purchasing additional Shares, selling some or all of their Shares, engaging in short selling of or any hedging or similar transaction with respect to the Shares, or changing their intention with respect to any and all matters referred to in Item 4.

Item 5.

Interest in Securities of the Issuer.

The aggregate percentage of Shares reported owned by each person named herein is based upon 64,024,000 Shares outstanding, as of September 30, 2011, which is the total number of Shares outstanding as reported in the Issuer’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on October 11, 2011.

A.	Starboard V&O Fund

(a)

As of the close of business on January 23, 2012, Starboard V&O Fund beneficially owned 1,784,358 Shares.

Percentage: Approximately 2.8%

(b)

1. Sole power to vote or direct vote: 1,784,358

2. Shared power to vote or direct vote: 0

3. Sole power to dispose or direct the disposition: 1,784,358

4. Shared power to dispose or direct the disposition: 0

CUSIP NO. 743312100

(c)

The transactions in the Shares by Starboard V&O Fund during the past 60 days are set forth in Schedule B and are incorporated herein by reference.

B.	Starboard LLC

(a)

As of the close of business on January 23, 2012, Starboard LLC beneficially owned 604,951 Shares.

Percentage: Less than 1%

(b)

1. Sole power to vote or direct vote: 604,951

2. Shared power to vote or direct vote: 0

3. Sole power to dispose or direct the disposition: 604,951

4. Shared power to dispose or direct the disposition: 0

(c)

The transactions in the Shares by Starboard LLC during the past 60 days are set forth in Schedule B and are incorporated herein by reference.

C.	Starboard Value LP

(a)

As of the close of business on January 23, 2012, 845,691 Shares were held in the Starboard Value LP Account. Starboard Value LP, as the investment manager of Starboard V&O Fund and the Manager of Starboard LLC, may be deemed the beneficial owner of the (i) 1,784,358 Shares owned by Starboard V&O Fund and (ii) 604,951 Shares owned by Starboard LLC.

Percentage: Approximately 5.1%

(b)

1. Sole power to vote or direct vote: 3,235,000

2. Shared power to vote or direct vote: 0

3. Sole power to dispose or direct the disposition: 3,235,000

4. Shared power to dispose or direct the disposition: 0

(c)

The transactions in the Shares by Starboard Value LP, through the Starboard Value LP Account and on behalf of each of Starboard V&O Fund and Starboard LLC during the past 60 days are set forth in Schedule B and are incorporated herein by reference.

D.	Starboard Value GP

(a)

Starboard Value GP, as the general partner of Starboard Value LP, may be deemed the beneficial owner of the (i) 1,784,358 Shares owned by Starboard V&O Fund, (ii) 604,951 Shares owned by Starboard LLC and (iii) 845,691 Shares held in the Starboard Value LP Account.

Percentage: Approximately 5.1%

(b)

1. Sole power to vote or direct vote: 3,235,000

2. Shared power to vote or direct vote: 0

3. Sole power to dispose or direct the disposition: 3,235,000

4. Shared power to dispose or direct the disposition: 0

CUSIP NO. 743312100

(c)

Starboard Value GP has not entered into any transactions in the Shares during the past 60 days. The transactions in the Shares on behalf of each of Starboard V&O Fund, Starboard LLC and through the Starboard Value LP Account during the past 60 days are set forth in Schedule B and are incorporated herein by reference.

E.	Principal Co

(a)

Principal Co, as a member of Starboard Value GP, may be deemed the beneficial owner of the (i) 1,784,358 Shares owned by Starboard V&O Fund, (ii) 604,951 Shares owned by Starboard LLC and (iii) 845,691 Shares held in the Starboard Value LP Account.

Percentage: Approximately 5.1%

(b)

1. Sole power to vote or direct vote: 3,235,000

2. Shared power to vote or direct vote: 0

3. Sole power to dispose or direct the disposition: 3,235,000

4. Shared power to dispose or direct the disposition: 0

(c)

Principal Co has not entered into any transactions in the Shares during the past 60 days. The transactions in the Shares on behalf of each of Starboard V&O Fund, Starboard LLC and through the Starboard Value LP Account during the past 60 days are set forth in Schedule B and are incorporated herein by reference.

F.	Principal GP

(a)

Principal GP, as the general partner of Principal Co, may be deemed the beneficial owner of the (i) 1,784,358 Shares owned by Starboard V&O Fund, (ii) 604,951 Shares owned by Starboard LLC and (iii) 845,691 Shares held in the Starboard Value LP Account.

Percentage: Approximately 5.1%

(b)

1. Sole power to vote or direct vote: 3,235,000

2. Shared power to vote or direct vote: 0

3. Sole power to dispose or direct the disposition: 3,235,000

4. Shared power to dispose or direct the disposition: 0

(c)

Principal GP has not entered into any transactions in the Shares during the past 60 days. The transactions in the Shares on behalf of each of Starboard V&O Fund, Starboard LLC and through the Starboard Value LP Account during the past 60 days are set forth in Schedule B and are incorporated herein by reference.

G.	Messrs. Smith, Mitchell and Feld

(a)

Each of Messrs. Smith, Mitchell and Feld, as a member of Principal GP and as a member of each of the Management Committee of Starboard Value GP and the Management Committee of Principal GP, may be deemed the beneficial owner of the (i) 1,784,358 Shares owned by Starboard V&O Fund, (ii) 604,951 Shares owned by Starboard LLC and (iii) 845,691 Shares held in the Starboard Value LP Account.

Percentage: Approximately 5.1%

CUSIP NO. 743312100

(b)

1. Sole power to vote or direct vote: 0

2. Shared power to vote or direct vote: 3,235,000

3. Sole power to dispose or direct the disposition: 0

4. Shared power to dispose or direct the disposition: 3,235,000

(c)

None of Messrs. Smith, Mitchell or Feld has entered into any transactions in the Shares during the past 60 days. The transactions in the Shares on behalf of each of Starboard V&O Fund, Starboard LLC and through the Starboard Value LP Account during the past 60 days are set forth in Schedule B and are incorporated herein by reference.

(d)

No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, the Shares.

(e)

Not applicable.

Item 6.

Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

On January 24, 2012, the Reporting Persons entered into a Joint Filing Agreement in which the Reporting Persons agreed to the joint filing on behalf of each of them of statements on Schedule 13D with respect to the securities of the Issuer to the extent required by applicable law. The Joint Filing Agreement is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

Item 7.

Material to be Filed as Exhibits.

99.1

Letter to the Board.

99.2

Joint Filing Agreement by and among Starboard Value and Opportunity Master Fund Ltd, Starboard Value and Opportunity S LLC, Starboard Value LP, Starboard Value GP LLC, Starboard Principal Co LP, Starboard Principal Co GP LLC, Jeffrey C. Smith, Mark R. Mitchell and Peter A. Feld, dated January 24, 2012.

99.3

Power of Attorney.

CUSIP NO. 743312100

SIGNATURES

After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: January 24, 2012

STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD

By: Starboard Value LP,

its investment manager

STARBOARD VALUE AND OPPORTUNITY S LLC

By: Starboard Value LP,

its manager

STARBOARD VALUE LP

By: Starboard Value GP LLC,

its general partner

STARBOARD VALUE GP LLC

By: Starboard Principal Co LP,

its member

STARBOARD PRINCIPAL CO LP

By: Starboard Principal Co GP LLC,

its general partner

STARBOARD PRINCIPAL CO GP LLC



By:	/s/ Jeffrey C. Smith
	Name:	Jeffrey C. Smith
	Title:	Authorized Signatory

/s/ Jeffrey C. Smith

JEFFREY C. SMITH

Individually and as attorney-in-fact for Mark Mitchell and Peter A. Feld

CUSIP NO. 743312100

SCHEDULE A

Directors and Officers of Starboard Value and Opportunity Master Fund Ltd

Name and Position	Principal Occupation	Principal Business Address	Citizenship

Patrick Agemian Director	Director of Global Funds Management, Ltd.	PO Box 10034, Harbour Place 2nd Floor 103 South Church Street Grand Cayman Cayman Islands, KY1-1001	Canada

Mark Mitchell Director*

Don Seymour Director	Managing Director of dms Management Ltd.	dms Management Ltd. dms House, 20 Genesis Close P.O. Box 31910 Grand Cayman Cayman Islands, KY1-1208	Cayman Islands

* Mr. Mitchell is a Reporting Person and, as such, the information with respect to Mr. Mitchell called for by Item 2 of Schedule 13D is set forth therein.

CUSIP NO. 743312100

SCHEDULE B

Transactions in the Shares During the Past 60 Days

Shares of Common Stock

Purchased

Price Per

Share($)

Date of

Purchase

STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD

60,663	20.3714	11/21/11
21,762	19.7800	11/22/11
32,809	19.7773	11/22/11
87,211	18.8266	11/23/11
23,730	18.5591	11/25/11
11,420	17.9767	01/04/12
500,747	17.6008	01/04/12
95,345	17.9746	01/05/12
94,534	18.0562	01/06/12
70,285	18.0500	01/09/12
37,391	18.3148	01/10/12
25,429	18.3950	01/11/12
26,574	18.4226	01/12/12
41,512	18.4000	01/12/12
48,069	18.5810	01/13/12
80,073	20.0204	01/19/12
10,000	20.6026	01/20/12

STARBOARD VALUE AND OPPORTUNITY S LLC

25,752	20.3714	11/21/11
9,238	19.7800	11/22/11
13,927	19.7773	11/22/11
37,021	18.8266	11/23/11
10,073	18.5591	11/25/11
3,300	17.9767	01/04/12
144,699	17.6008	01/04/12
27,552	17.9746	01/05/12
27,317	18.0562	01/06/12
20,310	18.0500	01/09/12
10,805	18.3148	01/10/12
7,348	18.3950	01/11/12
7,679	18.4226	01/12/12
11,995	18.4000	01/12/12
13,890	18.5810	01/13/12

CUSIP NO. 743312100

STARBOARD VALUE LP

(Through the Starboard Value LP Account)

74,400	20.3899	12/01/11
60,600	20.5801	12/01/11
42,000	20.8343	12/02/11
2,200	20.9368	12/02/11
20,000	21.3000	12/05/11
5,800	21.0013	12/05/11
75,000	19.4714	12/19/11
5,280	17.9767	01/04/12
231,519	17.6008	01/04/12
44,083	17.9746	01/05/12
43,707	18.0562	01/06/12
32,496	18.0500	01/09/12
17,288	18.3148	01/10/12
11,757	18.3950	01/11/12
12,286	18.4226	01/12/12
19,193	18.4000	01/12/12
22,224	18.5810	01/13/12
37,021	20.0204	01/19/12
64,337	20.6026	01/20/12
24,500	20.4632	01/23/12

EX-99.1 2 ex991to13d06297pro_01202012.htm LETTER TO THE BOARD ex991to13d06297pro_01202012.htm

Exhibit 99.1

January 24, 2012

Jay Bhatt

President and CEO

Progress Software Corp 14 Oak Park

Bedford, MA 01730

cc: Board of Directors

Dear Jay,

Thank you for taking the time to meet with us at your offices last week. The meeting was helpful in gaining a better understanding of your thoughts on the business, as well as the future opportunities and challenges facing the Company. We look forward to continuing our dialogue with you and the senior management team.

Starboard Value LP, together with its affiliates (“Starboard”), currently owns approximately 5.1% of the outstanding shares of Progress Software Corporation (“Progress” or the “Company”), making us one of the Company’s largest shareholders. As we discussed with you during our meeting, we believe that Progress is deeply undervalued. In fact, at the current price, we believe that the Company’s Application Development Platforms (ADP) business alone is worth as much as, if not more than, the entire market value of the Company. We believe this valuation discrepancy is, in part, due to the Company’s conglomerate structure consisting of a highly profitable mature business along with a money-losing growth business with little to no overlap.

While we understand that you have only just assumed the CEO position, we believe that the next several months will be critical as you and the Board of Directors (the “Board”) look to position the Company for future success. The purpose of this letter is to outline our thoughts regarding the valuation of the Company and our assessment of each of the Company’s businesses and product lines.

Consistent with how the Company measures its operating performance, for the purposes of our analysis we have separated the business into its three reporting units: Application Development Platforms (ADP), Enterprise Business Solutions (EBS), and Enterprise Data Solutions (EDS).

Application Development Platforms (ADP)

The Company’s Application Development Platforms business (ADP) consists primarily of OpenEdge, a suite of products used by small to medium-sized application software companies to build and run their applications. OpenEdge is sold both directly to IT organizations as well as to Independent Software Vendors (ISVs). Historically, OpenEdge differentiated itself with its ease of development and ability to run with minimal administration, resulting in a low total cost of ownership. While today OpenEdge is a relatively mature technology, its historical benefits resulted in it being embedded in the software of over 1,500 ISVs with more than 60,000 customers worldwide. These ISVs pay Progress a royalty based on revenue they receive from their respective customers. This allows Progress to maintain a very stable customer base with a highly recurring and predictable revenue stream while at the same time minimizing costs. Over the last twelve months alone, the ADP segment has generated revenue of approximately $326 million and operating profits of $199 million.

Application Development Platforms (ADP) Revenue and Profitability			($ in millions)

	2009	2010	2011E
Total Revenue	$328.6	$333.2	$326.5
Growth %		1.4%	(2.0%)

Operating Profit	$170.9	$209.6	$199.2
Margin %	52.0%	62.9%	61.0%

Source: Progress Software public filings. 2011 profit estimates from Wall Street Research.

Although the ADP business is maturing, the recurring and stable revenue stream, substantial switching costs, and sustained profitability make it extremely valuable. When compared to the entire enterprise value of Progress, the EBITDA generated by just the ADP business alone indicates a total company valuation of just 4.6x ADP EBITDA without taking into account any value for the Company’s EBS and EDS businesses, described below.

Application Development Platforms (ADP) Valuation	($ in millions)


PRGS Enterprise Value		$946.6
2011E ADP EBITDA		$204.5

Implied EV / ADP EBITDA		4.6	x

Note: ADP EBITDA estimated based on Wall Street Research estimates. Enterprise value assumes $65 million in share repurchases during fourth quarter were executed at average price of $20.00, resulting in the repurchase of 3.3 million shares. Enterprise Value based on share price as of 1/23/12.

Enterprise Business Solutions (EBS)

The Company’s Enterprise Business Solutions (EBS) business is comprised of a collection of market leading products to help businesses improve performance by gaining visibility into processes and responding to events in real time. This includes the Progress Savvion® business process management suite, the Progress Apama® event processing platform, the Progress Sonic® integration products and certain other products. In contrast to the Company’s maturing ADP business, the EBS segment sells directly to customers in one of the fastest growing segments of the software industry and faces intense competition from some of the industry’s largest players, including IBM, Oracle, Tibco and Pegasystems.

The competitive nature of the EBS business requires Progress to make significant investments in acquisitions, research and development, and sales and marketing to gain the scale needed to compete. However, despite generating revenue growth of approximately 22% per year over the last three years, both organically and through acquisitions, the EBS segment has produced total losses of approximately $154 million over the past three years.

Enterprise Business Solutions (EBS) Revenue and Profitability			($ in millions)

	2009	2010	2011E

Total Revenue	$85.1	$122.1	$136.8
Growth %		43.4%	12.0%

Operating Profit	($55.1)	($40.1)	($59.5)
Margin %	(64.7%)	(32.8%)	(43.5%)

Source: Progress Software public filings. 2011 profit estimates from Wall Street Research.

In 2011 alone, EBS generated losses estimated at $59 million on revenue of $136 million. Yet, despite the Company’s lack of profitability in this market, we believe that the EBS business is quite valuable. According to independent market research, the addressable markets for EBS products are expected to grow to between $2.5 billion and $6.5 billion by 2014. As shown in the table below, the historical and projected growth of the industry has resulted in similar pure-play businesses trading at multiples between 2.4x and 4.9x revenues.

EBS Public Comparable Companies Analysis					($ in millions)

	TIBX		INFA		PEGA

Enterprise Value	$3,946		$3,694		$931
Total Revenue	$920		$755		$391

EV / Revenue Multiple	4.3	x	4.9	x	2.4	x

Note: Total Revenue for latest reported twelve month period. Enterprise Value is based on share prices as of 1/23/12.

Clearly there is a substantial disconnect between the implied value of EBS based on the comparable universe and the valuation implied by Progress’ current stock price. We believe this valuation discrepancy is, in large part, due to two factors; sub-scale revenues and lack of profitability compared to its competitors. In order to address these two issues, revenues must grow rapidly and profitability has to improve. Unfortunately, for the past two quarters it appears revenues in EBS have stagnated and profitability has not improved. This has further exacerbated the valuation discrepancy and must be addressed.

Enterprise Data Solutions (EDS)

The Company’s Enterprise Data Solutions (EDS) business consists of a number of small products including DataDirect Connect, DataDirect Shadow and Data Services. These businesses provide database connectivity and data integration to facilitate communication between databases, mainframes and applications. While revenue has declined over the last several years, the Company has been able to achieve profitability by reducing expenses in the EDS business. Given the mature nature and leading market share in the DataDirect business, we believe the EDS segment could be substantially more profitable.

Enterprise Data Solutions (EDS) Revenue and Profitability					($ in millions)

	2009		2010		2011E

Total Revenue	$83.1		$75.0		$70.4
Growth %			(9.7%	)	(6.2%	)

Operating Profit	($6.4	)	($12.9	)	$3.5
Margin %	(7.7%	)	(17.2%	)	5.0%

Source: Progress Software public filings. 2011 profit estimates from Wall Street Research.

As shown in the table above, it appears that the EDS business is not currently contributing significantly to either revenue growth or profitability and is non-core to management’s current strategy. We believe the value of the EDS business is not currently reflected in the stock price and could provide incremental upside if divested.

Conclusion:

We believe the current market price of Progress fails to reflect the value of its sum-of-the-parts. In fact, our analysis suggests that the value of the ADP business alone is worth as much as, if not more than, the entire value of the Company, thus implying little, if not, negative value to the EBS and EDS businesses. We believe Progress’ large collection of mostly unrelated assets with substantially different growth and profitability prospects has obscured the true value of the Company. As described above, ADP is a mature business that should be valued relative to its cash flow, while EBS is a growth business that should be valued based on its revenue and future growth prospects. We believe this problem is compounded by the fact that the three segments have little, if any, synergies among them.

We understand that you are new to Progress and are likely undergoing your own review of the disparate operating businesses and opportunities to address the substantial valuation discrepancy between the intrinsic value of these businesses and the current enterprise value of the Company. The Board must also play an active role in this debate to fully understand all options and alternatives available to the Company to address these issues. When considering these different options, the Board must weigh the ultimate expected value of each alternative against the time and risk involved in order to maximize the risk adjusted present value for shareholders.

We believe that there is a significant opportunity to unlock value at Progress for the benefit of all shareholders. We look forward to working with you and the Board to meet that objective.

Best Regards,

/s/ Jeffrey C. Smith

Jeffrey C. Smith

Managing Member

Starboard Value LP

EX-99.2 3 ex992to13d06297pro_01202012.htm JOINT FILING AGREEMENT ex992to13d06297pro_01202012.htm

Exhibit 99.2

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k)(1)(iii) under the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of each of them of a Statement on Schedule 13D (including additional amendments thereto) with respect to the shares of Common Stock, $0.01 par value, of Progress Software Corporation. This Joint Filing Agreement shall be filed as an Exhibit to such Statement.

Dated: January 24, 2012

STARBOARD VALUE AND OPPORTUNITY FUND LTD

By: Starboard Value LP,

its investment manager

STARBOARD VALUE AND OPPORTUNITY S LLC

By: Starboard Value LP,

its manager

STARBOARD VALUE LP

By: Starboard Value GP LLC,

its general partner

STARBOARD VALUE GP LLC

By: Starboard Principal Co LP,

its member

STARBOARD PRINCIPAL CO LP

By: Starboard Principal Co GP LLC,

its general partner

STARBOARD PRINCIPAL CO GP LLC



By:	/s/ Jeffrey C. Smith
	Name:	Jeffrey C. Smith
	Title:	Authorized Signatory

/s/ Jeffrey C. Smith

JEFFREY C. SMITH

Individually and as attorney-in-fact for Mark Mitchell and Peter A. Feld

EX-99.3 4 ex993to13d06297pro_01202012.htm POWER OF ATTORNEY ex993to13d06297pro_01202012.htm

Exhibit 99.3

POWER OF ATTORNEY

The undersigned hereby appoints Jeffrey C. Smith, Mark Mitchell, Peter A. Feld and Kenneth R. Marlin, or any of them, his true and lawful attorney-in fact and agent to execute and file with the Securities and Exchange Commission any Schedule 13D, Schedule 13G, Form 3, Form 4, Form 5, any settlement agreement, any amendments to any of the foregoing and any related documentation which may be required to be filed in his individual capacity as a result of the undersigned’s beneficial ownership of, or participation in a group with respect to, securities directly or indirectly beneficially owned by Starboard Value and Opportunity Master Fund Ltd, Starboard Value and Opportunity S LLC, Starboard Value LP, Starboard Value GP LLC, Starboard Principal Co LP and Starboard Principal Co GP LLC or any of their respective affiliates, and granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing which he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. The authority of Jeffrey C. Smith, Mark Mitchell, Peter A. Feld and Kenneth R. Marlin, or any of them, under this Power of Attorney shall continue with respect to the undersigned until revoked in writing.

Date: September 15, 2011

/s/ Jeffrey C. Smith

Jeffrey C. Smith

/s/ Mark Mitchell

Mark Mitchell

/s/ Peter A. Feld

Peter A. Feld

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