Comnet merger receives approval New company will take Group 1 Software name

Software

September 26, 1998|By Mark Ribbing | Mark Ribbing,SUN STAFF

Comnet Corp. completed its merger yesterday with Group 1 Software Inc. after shareholders of the two companies approved the deal. The two Lanham-based firms aren't exactly strangers: Comnet already owned 81 percent of Group 1.

Comnet is the surviving company in the merger but has taken Group 1's name.

Comnet was a holding company, and Group 1, a business software developer, was the only firm it held. Under the terms of the stock swap, 1.15 shares of Comnet common stock will be traded for each Group 1 common share.

Based on yesterday's closing stock prices, the merger is valued at $7.76 million. Comnet stock climbed $1.75 yesterday to close at $8.25, while Group 1 shares ended the day at $9.50, up $2.1875.

Mark Funston, Group 1's chief financial officer, said the two tightly entwined companies decided to merge to make more stock available under the Group 1 name and to erase confusion about the two firms' relationship.

"Comnet and Group 1 were essentially the same company," he said. "There was really no reason any longer for having two separate companies there."

Funston said no job losses will result from the merger. The former Group 1 had about 300 employees in Lanham, while Comnet had about 30.

Robert Bowen, the chief executive officer of both companies, will be the CEO of the combined firm. Comnet Chairman James Manning will be the chairman of the merged company.

The newly formed Group 1 said yesterday that it has agreed to repurchase Merck & Co. Inc.'s holdings of Group 1 common and preferred stock for $4.1 million in cash. Merck, a New Jersey pharmaceutical company, was Group 1's largest shareholder, owning 14 percent of the company's common stock and 68 percent of its preferred stock.

rTC Group 1 said the repurchase should have a positive effect on earnings and would be funded by cash reserves.

Pub Date: 9/26/98

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