The following two posts are from a member of AOL who owns several thousand shares of Borland. I would appreciate some feedback on his point of view. Essentially, he and others believe there should be a cap on the acquistion costs. He posts:
"Put a cap on the visigenic deal. In order for people to invest in Borland over the next 3 months, they want a $ value cap on the deal. There is no longer an incentive to buy borl until the deal is finalized. if i am investor, i can buy borl at a discount by buying vsgn stock. also, i get the potential that someone else would try to buy vsgn. you guys [Borland] created this financial fiasco, i say
fix it ! and by that i mean fix the price of the deal so borlands stock price can get back on track !!
hope your reading denise
empire"
Empire also posted earlier:
"no doubt that this is a great aquisition which could greatly increase revenues and earnings in the coming years. however, the foolishness of the purchase terms makes me question what the hell they are thinking up in the front office. offering .81899 shares of borland for each share of visigenic with no upside price cap for borland shares. guess who makes the money with those term ?? yep, the visigenic shareholders !
this is so stupid i can hardly believe it. let me give you an example of what this equates to. lets say borland pulls a huge surprise and earns .25 a share this quarter and the stock goes to $17. what does it mean, it means we make money, but we overpay for VSGN because there is no price cap. is vsgn all of a sudden worth more, hell no !!
whats the message the terms of this deal send ? it says first you you sell borl and buy vsgn playing the spread as the wall street boys did big time today. this type of deal fuels arbitrage trading and punishes the buyout firms shareholders as we all know. second, it says that borland must be offering some sweet terms to the ceo of vsgn. think about it, you can now play borland long and reap the benefit of any positive surprise by buying VSGN !!!
all you need to do is buy 1.2 shares of VSGN and you are effectively long BORL at a discount to borlands price. don't they get it ??? this drives borlands price down !!!!!!
if you looked at the financials closely i think you will be digusted by this deal. these guys were/are bleeding cash and could have been in a very desperate situation in only a couple of months at which point borland could have been a white knight and bought them for a substanially smaller sum. coming in today, VSGN was worth somewhere around 70 mil basis the close on monday. however, basis borlands closing price of $12 and a .818 swap, they were all
of a sudden worth $ 140 million !! no way.
what has to give, it seems pretty obvious to me, borlands share price. guess how much mkt cap we lost today, about 60-70 million, guess where it went.
this is a bad deal for borland shareholders up front and we all have suffered already. i am personally voting my 10,000 shares no ! this was not thought out very well and i won't support it. i might add however, that i do support the purchase and think it is the right strategy.
fwiw, if i was del, i would have issued prefered shares, with a yield of about 8%, to current shareholders. i would have offered about 10 million shares at about $12 per when the common hit $14. this would have given borl the cash for aquisitions and allowed them to better dictate the terms of any purchase. think how much money it could have already saved us ! we could have cut the cost of the visisgenic aquisition by an easy 35% or more !!
empire"
Comments please.
Sam
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