STOCKHOLM (04/28/2000) - The pending merger between software vendors Corel Corp. and Inprise/Borland Corp. looks to be on shaky ground. Following a recent slide in the share price of its proposed merger partner, Inprise/Borland announced yesterday that it has asked its financial advisor to re-evaluate the "fairness" of the financial terms of the agreement the two inked on Feb. 6.
Inprise/Borland's board of directors has requested Broadview International LLC, which also advised the company in February to update its opinion on the fairness of the transaction terms, from a financial point of view, to Inprise/Borland shareholders, the software development tools maker said in a statement.
Under the terms of the February merger agreement, holders of Inprise/Borland stock would receive .747 of a Corel common share for each share of common stock in Inprise/Borland. At the time, the deal was valued at US$2.44 billion. [See "Aiming at Linux, Corel and Inprise to Merge," Feb. 7.]Corel shares, however, have lost much of their value since the agreement, when they were trading in the $19 to $20 price range. At the close of trading on the Nasdaq exchange yesterday, Corel shares had recovered slightly to close at $6.84, up 3.3 percent on the day.
Only a week ago, however, Inprise/Borland still maintained that the merger was on schedule, despite a pending lawsuit and news that Corel was running out of cash. [See "Inprise Voices Confidence in Merger Partner Corel," Apr. 21.]In yesterday's statement, Inprise/Borland said its board of directors had decided to ask for a new opinion on the merger terms, after taking into account, among other things, Corel's first-quarter financial results and other recent statements concerning the company's cash position and near-term financial prospects.
For its first quarter, ended Feb. 29, Corel reported a net loss of US$12.4 million, or 19 cents per diluted share, compared to a net loss of $14.6 million, or 24 cents per share, for the year-ago quarter. [See "UPDATE: Corel Posts Q1 Net Loss," March 20.]Broadview is expected to complete its updated financial review within the next few weeks, Inprise/Borland said.
Separately, Inprise/Borland yesterday also announced a net loss of $1.1 million, or 2 cents per share, for its first quarter of fiscal 2000, ended March 31. In the comparable quarter a year ago, the company reported a net loss of $25.6 million, or 54 cents per share.
Revenue, meanwhile, rose to $46.5 million, from $43.4 million a year ago.
Inprise/Borland shares jumped 10 percent to close at $5.31 at the end of yesterday's trading on the Nasdaq exchange.
Corel, in Ottawa, Canada can be reached at +1-613-728-8200, or via the Web at http://www.corel.com/. Inprise/Borland, in Scotts Valley, California, is at +1-831-431-1000, or at http://www.inprise.com/.