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Technology Stocks : Frontier - FRO

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To: zebraspot who wrote (190)	3/19/1999 12:09:00 AM
From: Ron Sirch	Read Replies (1) of 245

The price target of $80 is derived from what Grubman believes GBLX's standalone (pre-Frontier) value should be after reviewing GBLX's expanded business plan. He believes GBLX is worth $72 per share standalone pre-FRO. He also believes the addition of FRO's assets will allow GBLX/FRO to address a bigger market sooner, which no doubt will add value on top of the $72 per share. Under the provisions of the agreement Fro will receive $62 per share if GBLX trades between $34.56 and $56.78. (If GBLX trades below $34.56, FRO can walk unless GBLX adds cash or shares to maintain a $62 value for FRO shareholders.) If GBLX trades above $56.78, the deal is a fixed exchange ratio of 1.0919 shares of GBLX for each share of FRO. Grubman calculates a minimum value of $72 for GBLX times 1.0919 or $78.60 for FRO which he rounds up to $80. As noted above, the target price would be even higher if he included the value of the increased market share he believes will accrue to GBLX/FRO as a result of the accelerated ability of the combined entity to address a much larger market.

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