M

1
MA ChallengesOctober of 1999Ken Sexton, SVP
CFO
2
Outline

• Background
• MA War Stories
• Lessons Learned
• Conclusion

3
MERANT Today

• Combination of Micro Focus plc and INTERSOLV, Inc
• Worldwide Presence - 50 countries
• NASDAQ London Exchange
• Revenues 375 Million
• 600 Million Market Cap
• 120 Million in Cash
• MA History

Leader in Enterprise Application Development
4
Belgium Acquisition

• Company Background
• Belgium based
• VC fundedPlans to go Public
• 20m business, with losses
• Large in Japan
• Strategic Reasons
• Buy vs. build.time to market
• Presence in Japan
• Sellers Objective
• VCs want high return!
• Show me the money

5
Belgium Acquisition..

• Lets Make a Deal
• Oct. 95
• Pooling Transaction
• 80m Value
• Good News
• Technology Fits
• Non-US Shareholders more Liquid
• Stability of Belgium Employees
• Bad News
• Never Leveraged Japan
• Expensive to Restructure
• Belgiums View of Options Bonuses
• Dilutive.Never paid for itself

6
UK Acquisition...

• Company Background
• Founder owned 45
• VC owned 45
• UK based
• 10m in Revenue
• Strategic Reasons
• Complementary product
• SYNERGY
• Sellers Objective
• VCLiquidity
• FounderWealth

7
UK Acquisition.

• Lets Make a Deal
• March 98
• 20m Value
• Pooling.All Stock
• Good News
• Marriage Made in Heaven
• UK Shareholders Long-term View
• Stability of UK Employees
• Bad News
• US Employment Practices
• Expensive to Restructure
• Negotiations Focused on Governing Law
• Weakness of Non-competes

8
Micro Focus INTERSOLV Merger

• Micro Focus
• CA based, with UK Roots
• Founded in London
• London Exchange
• INTERSOLV
• MD Based
• 15 Year History of MA
• NASDAQ Listed
• Merger Overview
• Merger of Equals
• Micro Focus Acquired INTERSOLV
• 500m Value
• Pooling in US
• Purchase Method in UK

9
Micro Focus INTERSOLV MergerGood News..

• Communications to Shareholders
• Solicitation Rules in UK
• Geographical Concentration
• LSE Flexibility
• Focus on EBITDA (Cash)
• UK Shareholders More Long-term
• Lawsuits More Likely in US

10
Micro Focus INTERSOLV MergerBad News..

• Two Sets of Rules
• GAAP
• LSE vs SEC
• Anti-Trust
• Two Sets of Practices
• Press Releases
• Face-to-face Meetings
• LSEs Acquisition Requirements
• UK Rules Dilute Lock-up Provisions
• US Shareholders View of ADRs
• UK Shareholders View of Options
• Long-term Nature of UKEffect on Liquidity

11
Cross-Boarder Complications

• Stock Exchange Rules
• NASDAQ 10 Rule vs. Multiple LSE Rules
• Disclosures in complete conflict
• Accounting Rules
• Pooling vs Purchase
• Pre-goodwill Earnings
• Local Practices
• Press Releases.variances of styles
• Employment Law
• IncentivesOptions Bonus
• Global View