Computer Firm Makes Merger Bid

By Abrahms, Doug | The Washington Times (Washington, DC), February 12, 1998 | Go to article overview

Computer Firm Makes Merger Bid


Abrahms, Doug, The Washington Times (Washington, DC)


Computer Associates International Inc. bid $9 billion yesterday for Computer Sciences Corp., a company with about 7,300 employees in the Washington area.

Computer Associates wants to combine its corporate software business with CSC's technology services. Computer Associates offered $108 a share for CSC stock, well above its $92.19 closing price on Tuesday.

"We have the products. They have the services," said Charles Wang, Computer Associates' chairman and chief executive. "There's just a tremendous amount of synergies."

Executives from both companies have been discussing a merger since December but have been unable to agree on a price, Mr. Wang said. CSC officials had no comment on the buyout offer yesterday.

The merger would be one of the largest in the computer industry, right behind Compaq Computer Corp.'s agreement last month to pay $9.6 billion for Digital Equipment Corp.

The combined companies would have annual revenues of about $11 billion and about 55,000 employees.

Wall Street punished Computer Associates stock yesterday, sending it down $7.81 to $50.25 a share yesterday on the NYSE. Analysts were concerned that buying CSC would drag down Computer Associates earnings for several years.

But Computer Associates has successfully acquired more than 70 companies during the past decade, said Charles Phillips at Morgan Stanley Dean Witter Discover & Co.

"I think this is a good strategic fit for CA," he said. "We had been urging something like this."

Computer Associates will be able to tap into CSC's work force of 44,000, many of whom have specialized computer training, he said. The combination would be better positioned to take on IBM, still the nation's leader in providing software and services to large mainframe computers owned by large corporations.

Since the two companies have few overlapping lines of businesses, analysts and Computer Associates executives say few workers would lose their jobs if the companies merged. …

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