Corel, Borland Terminate Merger Pact

BOSTON (05/16/2000) - Corel Corp. announced today that it was not going to acquire Inprise/Borland Corp. after a merger agreement they reached three months ago was terminated by mutual agreement.

Despite their separation, Corel stated that both companies are parting on good terms, and it will continue to seek partnership opportunities with Borland.

Corel said no termination fees will be charged to the company, and that a plan to realign cost structure will save the company US$40 million.

Dr. Michael Cowpland, president and chief executive of Corel, said he was disappointed but that the merger termination would not alter the company's "strategic focus," especially on Linux related products.

The merger had already looked to be on shaky ground before today.

Inprise/Borland had requested that Broadview International LLC, which also advised the company on the deal when it was announced in February, to update its opinion on the fairness of the transaction terms. The problem was that, under the terms of the merger agreement, holders of Inprise/Borland stock would receive .747 of a Corel common share for each share of common stock in Inprise/Borland -- but since February, Corel's stock slid. [See "Inprise Seeks Advice on Corel Merger Terms," April 28.]Corel shares, however, have lost much of their value since the agreement, when they were trading in the $19 to $20 price range. Today, Corel shares rose 40 cents to US$5.81 in mid-day trading.

Today on a conference call, Corel executives said that a variety of factors weighed on the decision to terminate the merger, though they did not pinpoint any specific factors.

"There were many factors," said Cowpland. "We're not trying to pinpoint any one factor."

The executives also addressed the company's cash position in wake of a filing last month with the U.S. Securities and Exchange Commission (SEC), in which Corel announced it could run out of cash in 90 days if its merger with Inprise didn't go through. [See, "Corel May Run Out of Cash if Inprise Merger Falls," April 21.]Executives on the conference call today said, however, that the company has had "many offers" for financing the company and that Corel is in the process of evaluating those offers.

"We have the opportunity to make many other additional partnerships and we will announce them in the next months," Cowpland said.

Corel, in Ottawa, Canada can be reached at +1-613-728-8200, or via the Web at Inprise/Borland, in Scotts Valley, California, is at +1-831-431-1000, or at

(Additional reporting by Marc Ferranti.)

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