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Gold/Mining/Energy : GEAC.....Canadian best kept secret

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To: Serge Collins who wrote (845)	7/30/1999 11:44:00 PM
From: micromike	of 1571

1. Why go to Europe to make an acquisition? This will only complicate integration. What company could Geac takeover in North America and the analyst say it's a perfect fit. Don't forget the shares took of to 33 bucks before those two large JBL shareholders got greedy on us. 2. This stock could have been purchased for 42p earlier this year, so why did Geac pay such a big premium? Ignore the revenues, there are many companies out there trading at .02, .03, .04 x sales. Big revenues don't make it a good deal. If they are making money then you are going to pay a really big premium to take them out. Don't forget you need 90% of the shareholders to agree. IMHO the price does seem fair and also you want a friendly take over considering you need the people to work for you not against you. I know you follow NN and as Mathews said you can do a hostile take over but I will raid all the good employees and open up shop up across the street the next day. 3. How profitable is this company? How many profitable quarters have they had in the last eight quarters? Will their business model be a drain on Geac's bottom line? There is no sense pumping up the top line if the bottom line goes negative. It's profit margin that counts, not revenues. They haven't been profitable or else they would have been paying a bigger price. If Geac can do that synergies thing then they will turn it around. Also Geac is going for customer base for their maintenance programs. If you read last Q they make big money on maintenance contracts. 4. How much Goodwill does Geac have to assume if they buy them out at the announced price? How much affect will that have on profitability? Good will is a fact of life when you purchase companies unless they are bankrupt. 5. What shape is JBA's balance sheet in? How much debt/liabilities is Geac taking on? The reason the two major shareholder want more is that they say JBA is debt free. The question I'm wonder is what state are their customers in regarding Y2K ready. 7. Why does this company insist on growing through acquisitions when investors are looking more and more for companies that grow internally? Don't they realize that investors will pay more for a company that can create its own growth rather than one that tries to buy it? (If someone tells me that it is difficult to grow in this software niche without acquisitions, my answer will be -- ah, therefore, it's a mature sector and growth multiples should be ratcheted downward.) Geac is well know for their acquisitions and history has spoken so I would think most investors who invest in Geac expect this to continue. And last but not least it looks like $27.50 could be the bottom but time will tell. I did check JBL and their share price is 253p which means the market is expecting a higher bid to come in. If Geac can pull off another 60 cents this quarter then they should have another 36 Mil in cash to put towards the higher offer they will have to make to take them out. JMHO Mike

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