I haven't closely read the thread as it relates to what everyone thinks Borland's shares should be right now; I just happened to notice what I considered to be a totally irrational computation someone put forth. That said, it is simple enough to get a "starting point":
Borland's value pre-announcement was fairly stable at 11-1/2, assuming the price of 12 was just a temporary blip. So, you could expect the market to react as follows:
Borland 40M shares x 11.5 = 460,000,000
VSGN 14.5M shares x 5.25 = 76,125,000
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Total 536,125,000
Divide by post-announcement
Borl shares outstanding / 52.5M
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Estimated Borl Share Price 10.211
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Essentially, this is the price I'd expect the market to put on Borland's stock after the announcement. But it takes into account no synergies, and no intrinsic value for VSGN's underlying assets. This is critical, as VSGN was at a 52-week low -- in effect, the market was ignoring the intrinsic value of these assets at the time of the announcement, because they were not productive. Clearly, these same assets in Borland's hands should be much more valuable.
What we now have is a combination of two companies, the stocks of which were underpriced to begin with. Both coming off 52-week lows; VSGN having seen a price of near 18 in the last year. In my view, 10.211 represents an absolute low. While the market may well cause it to dip below 10 (as it has already), I do not anticipate any sustained pricing at that level.
I know I didn't exactly answer your question, but I hadn't weighed-in on this valuation issue and thought it would make a good chance to throw in my 2 cents.
David |
