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Gold/Mining/Energy : MGI Software (MGI on the TSE)

MGI 10.99

0.0%

Jun 1 5:00 PM EST

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To: Trader Dave who wrote (262)	5/22/1998 1:23:00 PM
From: Steve Stinson	Read Replies (1) of 553

I think this is good news for both companies. DSLGF avoids getting into a market they know nothing about and diluting their stock. MGI gets out of a deal that no longer made any sense given the drop in the value of Discreet's shares. At the same time, MGI avoids the substantial penalty it would face if it had broken the deal. I think MGI's objections to the termination of the deal are more a face-saving action than any reflection on the company's prospects. Who knows, the deal might be back on again once a number of issues are resolved such as DSLGF's longer term prospects (as reflected in its share price) and PhotoSuite II is delivered. Microsoft's antitrust problems may also be having an impact given that PhotoSuite operates on top of Internet Explorer. Technology wise, at least, the two companies still make a good fit. It was these other issues which conspired against the deal. Now that the two companies can be viewed separately, we will get a clearer picture of what was undermining the share prices of both companies. I think both companies stand to benefit once the dust settles. Steve

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