Computer Associates International Inc chief executive Charles Wang suggested to the Washington Post that he might consider abandoning his hostile takeover attempt of Computer Sciences Corp if the poison pill amendments to CSC by-laws are allowed to stand by a Nevada court. A hearing on the legality of the shareholder rights plan instituted by CSC […]
Computer Associates International Inc chief executive Charles Wang suggested to the Washington Post that he might consider abandoning his hostile takeover attempt of Computer Sciences Corp if the poison pill amendments to CSC by-laws are allowed to stand by a Nevada court. A hearing on the legality of the shareholder rights plan instituted by CSC to fend off CA’s $9.8bn bid will be heard on March 16. CA filed the suit in February, claiming that CSC isn’t giving its shareholders the right to seriously consider the takeover plan. The plan includes inflated salary and bonuses for CSC executives in the event of a takeover and a provision that says a 90% majority is now necessary to make any shareholder-initiated by-law changes. Wang told the Post, If I can’t get the barriers to a deal down, of course I have to seriously consider my options. Wang also told the newspaper that CSC chief executive Van Honeycutt was concerned only with his own compensation package when first approached by CA over a possible merger. That allegation comes after CSC filed a suit in Los Angeles last week alleging unfair business practices by CA for trying to bribe Honeycutt into supporting the takeover with a $50m compensation package of salary and stock options (CI No 3,355). On Tuesday, CSC filed another suit in Los Angeles against Bear, Stearns & Co in an effort to stop the investment bank from advising CA in its takeover bid. The suit contends that a senior director of Bear Stearns used inside financial information about CSC – such as cash flows and revenue projections – that he learned from an unrelated transaction in an attempt to strengthen CA’s position in the proposed acquisition. Ironically, CSC released just such financial information on Wednesday in an effort to prove that it is worth more than $108 per share. The company revealed revenue projections of $6.58bn, $7.83bn and a $9.3bn for 1998, 99 and 2000, respectively. Earnings per share are being estimated at $3.41, $4.12 and $5.55, not including the effect of a two-for-one stock split payable March 23. On Monday, CSC had promised it would provide such evidence of the company’s financial health to substantiate its advice to shareholders that they reject CA’s offer. Following the release of the information, CSC shares fell $2 to close at $105.