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Technology Stocks : Borland and Open Env - RAD For the Inter/Intra Net
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To: Adam Honig who wrote (7)7/8/1996 3:36:00 PM
From: George Lazar   of 70
 
Adam, of course this is a horrible deal for current BORL shareholders.

"Under the terms of the agreement, which was approved by the board
of directors of both software companies, OPEN shareholders will receive
.51 shares of BORL common stock for each share of OPEN common stock
held by them; provided that the shares issued for each OE share
shall have market value of no more than $25 and no less than $12.75.
OPEN has approximately eight million shares and vested options
outstanding giving an indicated value of approximately $64 million
for the transaction. BORL has approximately 31 million shares
outstanding."

As long as the price of BORL is above $12.75 (and below $20),the
exchange ratio is 1 OPEN to .51 BORL. BORL would have to issue approx.
4 million shares in exchange for approx. 8 million OPEN shares by
increasing outstanding BORL shares from 31 to 35 million.

Following the 'floor' logic, at current BORL share price, $7.125/share,
the ratio will increase to 1 OPEN to .913 BORL; BORL needs to issue
7.3 million shares in exchange for the 8 million OPEN shares and
increase outstanding BORL shares from 31 to 38.3 million !!!!

This is MAJOR dilution, terrible news for us, BORL shareholders, and
a potential major windfall for current OPEN shareholders.

The merger should be renegotiated, and remove the 'floor' clause.. when
the deal was originally negotiated, it was not assumed that BORL will
collapse, losing 65% of its value in 30 days !!
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