Mr.Batra, Today BORL closed at $6.8125/share which translates to
close to 7.5M BORL shares for OPEN. This is for a company of about
200 people, $20M annual revenues (about 10% of a weak BORL),
unfocused product and marketing strategy...
In addition OPEN lost more money in the last QTR than have ever
made before in its short existence; they don't have breaktrough
technology...
Allegedly, they have $17M cash/securities...will see.
For all this, BORL's management is giving away 25% of the company,
by diluting shareholder's equity.
Why is this a great deal for OPEN ? Let's assume you have a company
with shaky technology and marketing strategy, no income growth,
losses start to mount.. with some cash left from venture capital as
a bait... what would you do ? How about a stock merger ? No cash
needed, 'just' issue more new shares, who cares about shareholders..
If BORL doesn't come along, OPEN would need a friendly 'white knight',
that could be very tough with the losses in the books they had in QTR1
or just keep 'bleeding' the cash away... Imagine, if you add up all
earnings and losses OPEN had since inception, they have not made one
penny yet...
Anyway, OPEN's founders will get their 8M BORL shares and sit on it...
.if BORL 'recovers' to $12 in a year, they made about $100M for which
is about 250% appreciation of the current OPEN valuation. This is a
sweet way out from an impossible situation for OPEN...
Who is the loser in this picture ? You've guessed right, we current
BORL shareholders.. with this severe dilution BORL starts to look like
Western Union which drifted from the $20s to $2 and then to bankruptcy..
My point is that OPEN needs this merger more than BORL does, and the
original exchange ratio of .51 should be observed without any 'floor
clause'.
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