NEW YORK - Ten minutes before the board of the Sperry
Corp. was to begin an 11 a.m. meeting at the company's Manhattan h
eadquarters last week, an envelope arrived, carrying a $76.50-a-share
acquisition offer from the Burroughs Corp.
Two hours later, Sperry agreed to the offer, a decision that will
create the nation's second-largest computer manufacturer after the
International Business Machines Corp.
But the courtship that led to Sperry's agreement to merge with its
rival from Detroit was far more emotional and carried with it a
history of firsts and starts. The denouement involved hundreds of
hours of legal and investment banking work, some of it done from
vacation retreats on Long Island, and is a classic example of two
companies trying for weeks to outmaneuver one another in what quickly
became this year's most closely watched hostile takeover.
For the past year the dream of W. Michael Blumenthal was to create
a new force in the computer industry by combining Burroughs, where he
is the chairman, with rival Sperry. Last year the two computer
middleweights first discussed, but abandoned, the idea of ganging up
on the heavyweight, IBM. Burroughs offered $65 a share, but Sperry
The current round began in May when Burroughs approached Sperry
with a $70-a-share offer. But before Sperry had a chance to respond,
Burroughs began a hostile tender offer of $70 a share. Later it
indicated it was willing to pay more and talks began.
This time, Blumenthal was determined. He had even gone so far as
to obtain prior antitrust approval from the Justice Department.
But the dream appeared to be slipping away again on May 19, when a
letter from Burroughs informed Sperry that it was only willing to go
as high as $75 a share, Sperry, hoping for as much as $80 a share,
walked away from the bargaining table in a huff, accusing Burroughs
of bargaining in bad faith and, as one insider said at the time,
using a ""bait and switch'' tactic of offering a higher price than it
was actually willing to pay.
But behind the scenes, sources close to the talks said, things
were not quite as bleak. The First Boston Corp., acting on behalf of
Sperry, and Lazard Freres & Co., representing Burroughs, were still
""It was not principal to principal,'' said one source familiar
with the deal, meaning that Blumenthal had not been in direct contact
since May 19 with Gerald G. Probst, the influential chairman ofSperry
who would have to be won over if the merger was to succeed.
Burroughs, in fact, was said to be harboring a secret hope early
last week that the Sperry board would decide to go against the wishes
of Probst and approve the $75-a-share offer. …