In an unprecedented move, Computer Associates (CA) has dropped its bid to buy IT services firm Computer Sciences Corporation (CSC).
The hostile takeover was fast becoming the most bitter battle in IT history.
In a letter to CSC, Charles Wang, chief executive officer of CA, accused the firm of waging a campaign of "unlawful roadblocks and baseless mudslinging lawsuits". In the letter Wang said that CA would not be extending its cash tender offer of $108 per CSC share beyond midnight, 16 March.
CSC has made it clear it intends to hold out beyond that deadline.
The move follows two weeks of turmoil. In a filing with the Securities and Exchange Commission, CSC formally rejected CA. Val Honeycutt, CEO, said the company was looking for a "white knight", opening the doors for a potential sale or merger with another company.
CSC also filed its second lawsuit against CA in less than a week. This time it alleged CA had violated US securities laws and misappropriated trade secrets.
In a public letter to CSC employees, Honeycutt said the company was taking action against CA for unfair, unlawful and fraudulent business practices.
Waverly Deutsch, group director for IT research at Forrester Research, said the events of the previous few week have shown that "CSC is not adverse to being acquired. It's the marriage with CA that it is resisting." Deutsch believes that this is because a lot of clients chose CSC because it was vendor-independent and CA is seen as very product-centred.
In a Forrester briefing paper on the acquisition bid, Deutsch said that CA should build a services division from smaller acquisitions rather than attempt to buy a big player like CSC.
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