Borland and Open Env - RAD For the Inter/Intra Net Message Board

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Technology Stocks : Borland and Open Env - RAD For the Inter/Intra Net

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To: Dr. A. Zeev Hed who wrote (26)	7/14/1996 7:57:00 PM
From: Bipin Prasad	of 70

A deal is a deal, however when Borland was making the deal, it was led to believe that it was buying a company that was $8M revenue per quarter, not a company that made a loss of $4 million on a revenue of $4M. i.e. Borland shareholders are now being asked to pay the same price for a company half the size and in worse shape. It could be alleged by Borland shareholders that financial and other disclosures were less than accurate. Such cases have been successfully brought and won in the past by the acquiring company. A 0.51 share exchange ratio maintains a good parity in values given the relative performance of the companies, even at the current prices. Take the last quarter which was bad for both companies and .51 ratio: SharePrice NoofShares TOTalValue 7 33 $231M 3.5 8 $ 28M Value Ratio 231:28 = 8.25:1 Revenue ratio: 35:4 = 8.75:1 Thus stock valuation ratio and revenue ratios are roughly the same. Thus the 0.51 share exchange ratio is still fair. The collar will force Borland shareholders to succumb to paying twice as much. Under such circumstances, possibility of legal action by shareholders cannot be ruled out. They may rightfully demand to see if there was full disclosure of all relevant financial info while the deal was being negotiated or were there some activities that should have been brought forward and was omitted. If OPEN did not surprise with a dramatic reduction in revenue, this would not have been an issue, and the collar could be easily justified in terms of value. OPEN shareholders had to vote on the acquisition after the announcement was made. Why would it be wrong to ask Borland shareholders to vote on it ?

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