Computer Associates Steps Up Pressure In Takeover Bid
Computer Associates International Inc. Monday stepped up the pressure on Computer Sciences Corp. to negotiate over the software makers unsolicited $9 billion takeover bid.
Computer Associates President Sanjay Kumar said the maker of complex computer software mainly for businesses wanted to start negotiations immediately and that if meaningful talks had not started by noon Monday it might have to lower its offer.
The offer, equal to $108 a share, got a less-than-warm reception when it was announced on Tuesday. Computer Sciences, a computer services company, urged shareholders not to take any precipitous action until its management had responded.
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A deal at that price would be the second biggest takeover in the computer industry after Compaq Computer Corp.s pact to buy Digital Equipment Corp. for $9.6 billion last month.
It was not immediately clear if talks had begun Monday, and officials of both companies could not be reached for further comment.
Computer Associates, which has acquired numerous smaller software makers, writes complex software that can take a long time to install. Computer Sciences support operations would help it compete with International Business Machines Corp., Oracle Corp. and other rivals, industry analysts say.
In his letter dated Feb. 15, Kumar wrote, Our request is simple. We would like to commence negotiations with you this weekend.
If substantive negotiations have not started by Monday at noon EST, we will have no choice but to move ahead on a unilateral basis at a substantially lower price, he said in the letter, which was released to the news media.
Computer Associates said when it announced its offer last week that the two companies had discussed a merger but have not been able to come to a final resolution.
Computer Associates said its biggest customers are demanding it provide not only software but also consulting and support needed to keep complex office systems working.
A deal would be just the latest for Computer Associates, which has a reputation as somewhat of a scavenger for snapping up weaker rivals. It bought Cheyenne Software for $1.2 billion in 1996 and Legent Corp for $1.8 billion in 1995.