Ann: Letter to Shareholders , page-2

Morningstar has an interesting discussion (dated 9 May) of the APA and CKI bids for ENV.
http://news.morningstar.com/articlenet/article.aspx?id=647336

Much of their analysis repeats my earlier comments, namely:
(a) APA's bid is already about the same as CKI's cash offer
(b) CKI's offer is fixed whereas APA's varies with its sp (i.e. might drop, or vice versa -- Morningstar notes that APA is already slightly overvalued)
(c) Unlike CKI's offer, APA's offer has an important advantage of rollover for most cap gains (i.e. no cap gain tax until you sell the converted APA shares down the road).
(d) CKI doesn't want to be an APA shareholder. :-(

Morningstar speculated (accurately IMO) that CKI might agree to the APA offer if APA offers enough cash. However, having enough cash for CKI and some others may require a large equity raising. Morningstar has two suggestions for APA:
(1) work out with CKI a joint takeover of ENV
(2) accept CKI's offer and pocket 800 Million.

But I wonder if APA has one of the following in mind:
(1) Get CKI to sell its 17% stake for $1.32 to APA, giving APA 51% ownership of ENV and CKI its cash (vs APA shares). APA can then proceed with the scrip offer to the rest of us.
(2) Find large ENV holders willing to sell 17% (305 million) of ENV shares, giving APA 51% ownership. Then boot CKI off the board and proceed with board-approved integration of APA and ENV.

Either of the above would likely require APA to do a cap raising. In addition, there is a risk that CKI or the market would want too much for the 17% shares. (ENV is already fully priced at $1.32). Also, APA may have restrictions even as majority owner of ENV to proceed with integration.