To almost nobody’s surprise, Borland Software’s board of directors has unanimously rejected a bid by dissident shareholder Robert Coates to buy several of its product lines, including the popular Delphi 4GL programming language and middleware deployment products. Coates was reported to have offered $150 million in cash for the assets.
Mr Coates’ offer came in the wake of an early July profit warning that brought the resignation of CEO Dale Fuller. Later that month, Mr Coates made public a letter to Borland’s board to break up the company.
Specifically, he called on Borland to divest development tools and middleware so the company could focus on selling application life cycle management (ALM) products. He rationalized the offer by criticizing Borland as a small company with a huge product portfolio that was preventing it from focusing.
Borland has dismissed Mr Coates’ plans, contending that although he once served for eight months on the board, that he is only an individual investor who hardly represents the will of the shareholders.
Mr Coates was a board member for eight months in 2000, resigning to protest a merger with Corel that was later aborted. He made a brief unsuccessful proxy challenge to rejoin the board early last year.
Scott Arnold, interim CEO, contended that there are formidable barriers to exiting the Delphi business, which is the most popular of Borland’s IDEs, and that it helped lead Borland into the life cycle portion of the business. And he claimed that Borland was becoming more proficient at ALM solution selling.
Compared to development tools, which are sold to developers, ALM requires a solution sell that involves a longer sales cycle to IT management. According to Arnold, the company is more regularly closing multi-million dollar ALM deals.
Added Boz Elloy, CTO, there is synergy between programming tools, which aim at developer productivity, and ALM products, that focus on organizational productivity.
Mr Coates was not available at press time. Borland would only release excerpts of a note issued by its attorneys stating that Delphi and Deploy are integral to Borland’s business and growth strategy, and are not for sale, and that the board is not interested in entering into discussions with him [Mr Coates] concerning these assets at the present time. The Board was unanimous in its views.