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Judge sets CSC hearing
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February 27, 1998: 9:25 a.m. ET
Companies to argue over bylaw changes on March 16; CA talks of racism
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NEW YORK (CNNfn) - The mudslinging between Computer Associates International Inc. and Computer Sciences Corp. (CSC) soon will have its day in court.
U.S. District Court Judge Lloyd George in Nevada agreed to the Islandia, N.Y.-based software company's request for an expedited hearing to be held on March 16.
Computer Associates (CA) called for the hearing after filing a lawsuit on Feb. 17 claiming new bylaws "improperly impede" the company from proceeding with its offer. CA is in the midst of a hostile $9 billion bid for El Segundo, Calif.-based consulting firm.
CSC amended its bylaws to delay any chances of a shareholders' meeting until 1999 and raised the voting threshold to remove a director from 50 to 90 percent.
CSC's board meets Friday to discuss the offer.
Meanwhile, the out-of-court mudslinging took a new turn on Friday after CA officials attacked CSC's anti-takeover defenses as almost racist.
CSC lawyers reportedly have been investigating Chairman and Chief Executive Charles Wang's ties to overseas investors and companies in order to suggest unresolved national security issues, The Financial Times reported Friday.
Because CSC has large contracts with federal agencies, such as the National Security Agency and the Central Intelligence Agency, any suggestions of improprieties could derail the bid.
But Wang, who was born in Shanghai and emigrated to the U.S. as a child, argued the probe suggested CSC has "almost a racist attitude," the FT reported.
Wang, who was angered by the CSC efforts, is a U.S. citizen and has personally held Defense Department security clearance since 1990.
Separately, CSC disclosed it is offering its financial advisers, Goldman Sachs and J.P. Morgan, an unusual $14 million bonus if they can successfully thwart CA's bid.
CSC has guaranteed quarterly retainer fees of $2.5 million for Goldman and $1 million for J.P. Morgan. If CSC remains independent, Goldman and Morgan will receive "incentive" payments of $10 million and $4 million, respectively, minus their retainer fees.
-- from published and wire reports
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