LinuxWorld: A tale of two mergers

“The proposed takeovers of Andover.net by VA Linux Systems and
of Inprise/Borland by Corel Corp. made big headlines when they were
announced in early February. Neither deal is proceeding according
to its original timetable. The VA-Andover deal was originally due
for completion in mid-May; now, the soonest it can happen is
mid-June. The Corel-Inprise acquisition, once expected to close in
June, was cancelled on May 16. The superficial resemblance of the
two situations invites a look at the reasons for the delays and the
ultimate collapse of the Corel-Inprise deal.”

“The hang-up in each case stems fundamentally from the caprices
of the stock market: both purchases are worth far less now than
when they were crafted back in February, because the deals involved
the trades of Corel’s and VA’s stock — and the prices of both have
declined significantly since then.”

“That’s maybe the biggest disadvantage of what has been going on
in the [mergers and acquisitions] world, where companies have been
using their stock as currency for acquiring other companies,” Susan
Thorner, a corporate and securities lawyer in San Francisco, told
LinuxWorld. “It’s all very well when the value of the stock just
keeps going up, but these guys got caught in the downdraft, and
these two situations illustrate what can happen.” As a result,
management at both Andover.net and Inprise have taken action
recently to reevaluate their companies’ positions.”

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