In a piece of news for those who don’t think the Pure Atria takeover by Rational Software Corp (CI No 3,135) will go through, a source at Morgan Stanley & Co tells us the agreement states that if either side withdraws or modifies their recommendation in an adverse way for approval of the merger, the company withdrawing must pay $18 million to the other the next business day. With a stipulation like that, it seems like the two are pretty serious about getting together, in spite of the recent sell-offs in stock. Morgan Stanley thinks the deal makes sense, given the product combinations and joint customer base. When Pure Atria reported on Thursday a previously announced first- quarter loss – $42m, or $1.00 per share – on revenue of $30m, the bulk of it was attributable to a charge relating to the acquisition of Integrity QA Software Inc. The rest was pegged as a revenue shortfall due to a lingering hangover from the merger that created the company, in particular the poor performance of the sales force in dealing with the unified product line.
