Computer Associates (CA) and Computer Sciences (CSC) have stepped up efforts to outmanoeuvre one another, as speculation continues over the final outcome of their marathon takeover battle.
The latest announcement by CSC rejected the software vendor's friendly bid of $114 per share or $9.8 billion, made two weeks ago. Last week, CA responded with a formal hostile tender offer of $108 per share or just under $9.2 billion. The provisional bid was reduced by CA to accommodate the 'loss in value' which it claimed would be associated with a hostile deal.
CSC said it rejected the deal because: 'The offer does not represent fair value.' Van Honeycutt, Computer Sciences CEO, said the growth potential of the service company was not taken into account by CA's tender offer.
CSC also claimed that combining the two companies does not make sense in business terms. In a letter to Charles Wang, CEO of CA, Honeycutt said: 'CSC's ability to provide independent solutions is a threshold issue for customers who demand platform neutrality. This neutrality would be severely compromised if CSC were to be acquired by CA.'
The potential reaction of CSC's clients, which in the UK include British Aerospace, Guinness and Anglian Water, could be the deciding factor which persuades shareholders to reject the bid.
Independent analyst Richard Holway said: 'Twenty-five per cent of CSC revenues for 1999 are with long-term customers which have a cancellation clause.'
'The fact that CSC's share price is now going back down suggests the US market, at least, believes this is not going to happen.'
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