Computer Associates launches hostile bid for Computer Sciences

Summary:NEW YORK-- Computer Associates International Inc. launched a hostile takeover of Computer Sciences Corp.

NEW YORK-- Computer Associates International Inc. launched a hostile takeover of Computer Sciences Corp. Monday of $108 per share after a sweetened $114 per share bid reportedly failed to get the CSC to the negotiating table. Last week CA made a friendly offer of $108 per share, or $8.56 billion, for CSC.

Monday, CA released a letter to Computer Sciences Chairman Van B. Honeycutt warning that after noon Monday CA "will have no choice but to move ahead on a unilateral basis at a substantially lower price."

CSC has approximately 85 million shares outstanding on a fully diluted basis, and approximately $700 million of indebtedness, giving the transaction a total value of approximately $9.8 billion, CA said Tuesday.

Credit Suisse First Boston arranged financing for the acquisition through Bank of America, The Chase Manhattan Bank and NationsBank, the company said.

In addition, CA announced that it has commenced legal action designed to compel CSC's board of directors to take appropriate steps to permit CSC's shareholders to consider the offer. CA also said it is filing with the Securities and Exchange Commission preliminary materials for solicitation of written consents, proxies and agent designations from CSC shareholders that are intended to expedite the tender offer.

According to a report in Tuesday's Wall Street Journal, CA's financial advisers told Computer Sciences advisers that the Islandia, N.Y., software-maker was prepared to pay $114 a share in cash if Computer Sciences negotiated a friendly merger.

However, neither Computer Sciences nor its advisers responded to the offer. A spokesman for Computer Sciences said Monday "we are going to respond after we have fully contemplated their offer, late this week." He declined to comment about CA's new letter.

Topics: Hardware

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