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Technology Stocks : BORL: Time to BUY! -- Ignore unavailable to you. Want to Upgrade?

To: Paul Corbett who wrote (7623)	11/20/1997 10:37:00 PM
From: Neil Booth	Read Replies (3) \| Respond to of 10836

I'm even more convinced about this $150m price tag being fixed than I was before. Borland's closing price was exactly $12 a share the previous night. What is $150m / $12? It is 12,500,000 shares. If you go and look at the press release, it states "Approximately 12.5 million shares of Borland common stock will be issued at the close of the transaction...". Let's ignore the word 'approximately' for the moment. These numbers are identical. The strange conversion ratio is just 12.5 million divided by the anticipated number of outstanding VSGN shares at the close of the transaction (incidentally that is not quite the same as currently outstanding owing to employee share options and other minor complications). The only thing I worried about is the word "approximately". But this is easily explained too. When the buy occurs next year, BORL will issue stock to the holders of VSGN. A holder of 1000 VSGN would be entitled to 819.88 shares. The 0.88 of a share has to be ignored and given as cash. Hence only 819 would be issued, and the total issuance is slightly less than 12.5 million; probably by a few thousand shares owing to these rounding errors. Also, the exact issuance cannot be known at present as it depends on the lumpiness of the VSGN shareholdings on the buy date, so BORL cannot give an exact number anyway. I'm absolutely convinced the price was $150m no matter what happened, and that we BORL shareholders were very fortunate with the quick one day $1 spike upwards to $12; we obatined a better conversion ratio and less dilution because of it (by about 8% or 9%, actually). Neil.