Borland signs definitive agreement to acquire TogetherSoft for $185m in cash, stock

Borland Software Corporation today announced that it has signed a definitive agreement to acquire privately held TogetherSoft Corporation for $82.5 million in cash and 9 050 000 shares of Borland common stock.

The transaction is valued at approximately $185 million in the aggregate, based upon Borland`s closing price per share of $11.34 on 29 October 2002.

TogetherSoft is a leading provider of design-driven development solutions that accelerate the software development process. TogetherSoft solutions simplify and integrate design and analysis with development of complex software applications. TogetherSoft`s solutions operate with all major enterprise platforms and languages, including Java, C++, Visual Basic, VB.NET, and C#. Headquartered in Raleigh, North Carolina, with approximately 390 employees and 4 000 customers worldwide, TogetherSoft generated approximately $51 million in revenues over the last four quarters.

Borland`s President and Chief Executive Officer Dale L Fuller, said: "Two industry leaders in development and design have agreed to join forces to offer customers a new path for delivering software applications to market faster. Competitive pressures and time-to-market demands continue to compress the development process, making comprehensive, integrated solutions more important than ever. By tightly integrating TogetherSoft`s design and analysis technology with Borland`s development solutions, we would enable companies to create business applications more quickly and to compete more effectively. We believe this acquisition would significantly strengthen our product offerings and our leadership position in accelerating software application development."

TogetherSoft`s Chairman and Founder Peter Coad said: "TogetherSoft and Borland combined would be a powerful force in connecting programmers, designers and managers in real-time - code, designs and project plans always up-to-date, always in-sync."

In addition to his role as chairman and founder of TogetherSoft, Coad is known worldwide as an industry luminary. He has pioneered UML and design-driven development and authored and edited a number of related books for Prentice Hall. He is expected to play a key role in advancing Borland`s leadership position in the software development infrastructure.

Frederick A Ball, Borland`s Executive Vice President of Corporate Development and Mergers & Acquisitions, said: "With this acquisition, we are executing on our long-term strategy to extend Borland`s footprint across all the major areas of the application development lifecycle. TogetherSoft would bring a strong customer base and product offering, dedicated R&D organisation and well-trained worldwide sales force."

This acquisition is expected to add a critical design and analysis capability to Borland`s technology, helping Borland compete more effectively in the software application development market currently estimated at $9 billion and expected to exceed $15 billion by 2006, according to research firm IDC.

"Through the acquisition of TogetherSoft, we would add approximately 80 sales representatives, significantly strengthening our presence in the Americas and Europe," continued Ball. "Additionally, we would enlarge our R&D capabilities with the addition of development centres in St Petersburg, Prague, and Raleigh, complementing Borland`s existing development centres. This would create a truly global R&D organisation focused on enhancing existing products and delivering next-generation technologies."

Upon completion of the acquisition, Borland plans to continue investing in both the Borland JBuilder and Together ControlCenter product lines, creating hybrid solutions that integrate design and development for Java, .Net, and all other leading platforms. In addition, Borland plans to continue to support TogetherSoft`s existing strategy of offering design and analysis solutions that work with leading IDEs.

Similarly, Borland plans to continue supporting other leading providers of design and analysis products. Finally, Borland plans to extend TogetherSoft`s current products and deliver editions that are targeted at the indirect channel, replicating a seeding strategy that has been very successful for all Borland`s solutions. Over the next 12 months, product lines from Borland and TogetherSoft are expected to evolve onto a common and shared underlying technology platform that would be designed to enable Borland to drive engineering synergies and provide an enhanced user experience.

"Successful integration of TogetherSoft would be driven by a management team with a proven track record in all aspects of integrating acquisitions," added Ball. "A dedicated integration team has already focused on the challenges and opportunities involved in integrating the operations and cultures of TogetherSoft and Borland, and we are preparing to be ready to execute according to plan once the transaction closes."

"We believe this acquisition has the potential to significantly increase Borland`s future revenues and operating performance. Acquiring TogetherSoft is consistent with our goal of wisely deploying our assets to enhance stockholder value," concluded Fuller.

This transaction has been approved by the boards of directors of Borland and TogetherSoft and is subject to customary closing conditions, including approval of the transaction by TogetherSoft stockholders, Hart-Scott-Rodino clearance and approval by the California Commissioner of Corporations after a fairness hearing. The transaction is expected to close in the fourth calendar quarter of 2002 or the first quarter of 2003, subject to the timing of receipt of the requisite regulatory approvals. While the transaction is intended to be reported as a tax-free reorganisation under Section 368 of the Internal Revenue Code, the transaction is not conditioned on its treatment as a tax-free reorganisation. The directors, executive officers, and certain other stockholders with representatives on the board of directors of TogetherSoft, who hold in the aggregate approximately 67.5% of the outstanding shares of TogetherSoft`s capital stock, have entered into agreements with Borland in which they have agreed to vote all of the shares of TogetherSoft capital stock that they hold in favour of the transaction. Such shares represent more than the number of shares of TogetherSoft capital stock necessary to approve the transaction.

Bear, Stearns & Co. Inc acted as Borland`s financial advisor, and US Bancorp Piper Jaffray acted as TogetherSoft`s financial advisor with respect to this transaction.

In connection with the proposed transaction, Borland will file a permit application, including an Information Statement with the California Department of Corporations and mail the Information Statement to all TogetherSoft stockholders. TogetherSoft stockholders are urged to read the Information Statement in its entirety when it becomes available because it will contain important information about the proposed transaction.

The Borland common stock that would be issued to TogetherSoft stockholders in the proposed transaction would be issued after a fairness hearing is held before, and a permit has been issued by, the California Department of Corporations. This press release shall not be deemed in any way to constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the issuance of such permit or qualification under the securities laws of such jurisdiction.

Borland expects the acquisition to make measurable contributions to top-line growth in coming years, increasing revenues by approximately $60 million to $70 million in calendar year 2003. Excluding acquisition-related costs of approximately $6 million to $7 million, Borland expects the transaction to be accretive by the second half of 2003. Assuming that both the Starbase and TogetherSoft transactions close in 2002, Borland expects 2003 revenues to range from $355 million to $370 million. Earnings per diluted share, on a pro forma basis, are expected to range from $0.45 to $0.50.