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CSC may seek other offers
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March 2, 1998: 2:19 p.m. ET
Consulting giant to explore options, reaffirms rejection of CA's hostile bid
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NEW YORK (CNNfn) - Computer Sciences Corp. Monday officially rejected Computer Associates International Inc.'s $9.2 billion takeover bid and raised the possibility that it will seek a friendly deal with a third party.
In its official response filed with the Securities and Exchange Commission, the El Segundo, Calif.-based consulting giant said it will explore all alternatives to increase shareholder value, including the possibilities of an acquisition or merger.
"In connection with such exploration and consideration, the company expects to engage in discussions and may engage in negotiations with other parties," CSC said in its filing.
The company also reaffirmed its rejection of CA's $108-a-share, unsolicited bid.
Computer Associates, which has been trying to acquire Computer Sciences for months, said it will continue to press for a deal.
"After reviewing CSC's 14D-9 filing today, we see no new information from CSC," stated CharlesWang, CA's chairman and chief executive.
"CSC's principal justification for rejecting the offer appears to be our willingness to pay more in a promptly negotiated transaction. Under these circumstances, we are bewildered by the intransigence of CSC's management in refusing to meet with us and the lengths to which its Board of Directors has gone to frustrate the rights of CSC shareholders. We are hopeful that the prompt hearing the Nevada Federal District Court scheduled for March 16, 1998 will eliminate the impediments the CSC Board has erected and confirm the shareholders rights to have a say in accepting CA's offer."
Computer Associates called for the hearing after filing a lawsuit on Feb. 17 claiming new bylaws "improperly impede" the company from proceeding with its offer. 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.
Since Islandia, N.Y.-based CA announced its plans, CSC's stock (CSC) has soared more than 20 percent in value. At midday Monday CSC was up 3-1/8 at 107-13/16 while CA shares (CA)were up 1/16 at 47-5/16.
Meanwhile, a New York-based law firm has filed a suit charging CA officials with artificially inflating its stock price.
In a purported class action filed in the U.S. District Court for the Eastern District of New York, Bernstein Litowitz Berger & Grossmann LLP alleged the defendants "disseminated materially false and misleading information" to Wall Street stating that business prospects were sound and it was not planning any significant business acquisitions.
When it was finally disclosed that Computer Associates had been negotiating an acquisition of CSC at $108 per share in cash, Computer Associates shares plummeted to 50-3/4 on Feb. 11 from $58-1/16 on Feb. 10.
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