Computer Associates (CA) has agreed to acquire Platinum Technologies for $3.5 billion in cash, in a deal it claims is the largest in software history.
The move follows Platinum?s failure to buy rival Boole & Babbage last year after BMC stepped in (see VNU Newswire, 4 December, 1998), and a profits warning on 14 January this year when the company announced it would lay off 1,000 staff.
CA said it approached Platinum only last Monday about the takeover and reached an agreement this weekend. The transaction has already been approved by both companies? shareholders and CA plans to pay $29.25 for each Platinum share, almost three times their closing price on Friday of $9.875.
The deal will create a $6 billion company, with Platinum contributing $1 billion in revenues, and growth rates are anticipated to be around 20 per cent year on year.
Sanjay Kumar, CA?s president and chief operating officer, said: "We?re paying a substantial premium to market, but according to our forward looking estimates, Platinum will have an immediate accretive value over the next 12 months, without taking one time charges and restructuring into consideration."
He continued: "We will introduce operational efficiencies into the combined operations, which will enhance our revenues and add $0.25 to our earnings per share in the first 12 months. We?ll generate $450 million in additional cash each year and we?re paying in cash with a credit line from Credit Suisse First Boston that will have a four year repayment schedule."
Although he could provide no restructuring details or indicate how many Platinum staff would be made redundant, he said that CA had introduced a hiring freeze as of today and would try to redeploy as many employees as possible.
He also emphasised that there was little overlap between the two companies products sets and where overlap did occur both sets of offerings would continue to be supported.
But he believed the acquisition would boost Jasmine?s standing in the market by creating "end to end value added applications for the first time - we?ll cover the scoping, design, development, warehousing and deployment of applications - and we?ll be the first vendor to do that," he claimed.
The purchase would also enhance CA?s growing services business by adding Platinum?s 1,000 consultancy staff to its 3,000 strong organisation, he said.
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