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Technology Stocks : Intersolv News
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To: Ian Burton who wrote (1058)9/18/1998 12:20:00 PM
From: Mike Healy  Read Replies (1) of 1069
 
<<Bottom line then - what's your take on why the ISLI board want this deal?>>

I think the better question is...why do they STILL want it with MIFGY's stock down 60% from peak, nearly 50% since the merger announcement..and still falling. I honestly don't know. The board has a fiduciary out in the merger agreement (ie. they can terminate the deal if the board determines that proceeding with the transaction would be inconsistent with their fiduciary obligation to shareholders). So why doesnt the board just withdraw their support ? Im sure they are discussing this...perhaps it will still happen. It certainly should. One (minor) problem would be the $15+mm break-up fee they would have to pay to Micro Focus.

One reason management might be reluctant would be the compensation packages Micro Focus has agreed to provide...as well as the vesting of all stock options. It should not come as a surprise to anyone that management teams occaisionally sell out their shareholders to line their pockets. There are a lot of options out there, mostly Gary's, but somehow I still trust this management team and dont believe this is a significant motivation (Gary is also a big stockholder).

I suppose I still fall back on my first interpretation, that management and its advisors simply erred in not insisting on a floor or collar....now they are probably considering...more and more each day...whether they should just pull the plug. Even if they dont I think shareholders will, in which case ISLI will have to pay a break-up fee (but it would be well worth it).
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