CA to allow its takeover bid for CSC to lapse

Computer Associates has decided to let its offer for Computer Sciences (CSC) expire on March 16, because the takeover attempt was headed toward a protracted battle that had already become rife with mudslinging, according to CA Chairman and CEO Charles Wang. In a letter to CSC Chairman and CEO Van Honeycutt, Wang wrote that CA did not want to hurt the industry or the employees and shareholders of the two companies by engaging in a lengthy struggle.

Computer Associates has decided to let its offer for Computer Sciences (CSC) expire on March 16, because the takeover attempt was headed toward a protracted battle that had already become rife with mudslinging, according to CA Chairman and CEO Charles Wang.

In a letter to CSC Chairman and CEO Van Honeycutt, Wang wrote that CA did not want to hurt the industry or the employees and shareholders of the two companies by engaging in a lengthy struggle.

CA last month made an unsolicited offer of $108 per CSC share, prompting a war of words between the two companies over whether the deal was beneficial to CSC and to end-users.

Although the offer will expire, Wang said he still is amenable to negotiations, including the possibility of a cash transaction and stock options for CSC employees. There is, he said, "a very low probability" that he and Honeycutt will resume discussions.

Wang said that he had "misread" Honeycutt's intentions. Although Wang thought he and Honeycutt were in negotiations, and that the main issues came down to Honeycutt's role in a merged company and the stock price, Wang said that Honeycutt's subsequent hostility to the takeover attempt showed that this was not the case.

Wang has said that Honeycutt wanted US$130 per share for the company, but later suggested that he would consider $115 to $125 per share.

However, Honeycutt later publicly said he would not take any amount of money from CA.

In the wake of the deal's dissolution, CA will likely buy a number of smaller services companies, Wang said.

Likely future purchases will not be as large or costly as the CSC deal would have been, but Wang predicted that the company will consummate deals this year and next to make inroads into the services market.

Wang suggested that more details would likely be available at the upcoming CA World conference in New Orleans next month.

Computer Associates International Inc., in Islandia, N.Y. can be reached at http://www.cai.com. Computer Sciences Corp., in El Segundo, Calif., can be reached at http://www.csc.com.

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