Continuing its campaign to become a $20,000m-a-year company by the early 1990s by fair means or acquisition, Unisys Corp late Tuesday announced agreement in principle to acquire Convergent Inc, the San Jose firm that already gets some 20% of its $400m-a year plus business from Unisys, for $332m in cash and shares. The offer is […]
Continuing its campaign to become a $20,000m-a-year company by the early 1990s by fair means or acquisition, Unisys Corp late Tuesday announced agreement in principle to acquire Convergent Inc, the San Jose firm that already gets some 20% of its $400m-a year plus business from Unisys, for $332m in cash and shares. The offer is $7 a share, a whopping premium on the $3.4375 at which the shares closed on Tuesday ahead of the offer being made public. The consideration is expected to be 45% cash, 55% Unisys shares, but the details have not yet been settled. The transaction will involve the merger of Convergent with a wholly owned Unisys subsidiary in which either Convergent or the Unisys subsidiary will be the survivor and Unisys reserves the right to alter the structure to be all cash or all stock. Convergent will become a cornerstone of our rapidly growing business in distributed systems based on open industry standards and state of the art networking technologies. Convergent’s skills and expertise in engineering, manufacturing and third-party sales, will allow us to play a broader role in this market, said Unisys chief executive Michael Blumenthal. A key feature of the agreement is that Convergent chairman Paul Ely, who took on that position after holding very senior positions at Hewlett-Packard Co, will become Mr Unix at Unisys, joining the Unisys board and run Unisys’ worldwide distributed systems business, helping to guide the design, engineering, manufacturing, procurement, logistics, third-party sales and marketing strategies for Unisys systems based on CTOS/BTOS, Unix and MS-DOS and OS-2. Unisys will seek to expand Convergent’s OEM business, no doubt putting some of its own products through the same channels, and will continue the vertical market systems integration businesses that are grouped under the Convergent Business Systems banner, no doubt again adding its own products where appropriate. Unisys projects that its distributed systems business will generate $1,700m in revenue in 1988, including systems, peripherals, software and services, and that adding Convergent will take the operations over the $2,000m mark. Unisys said it foresees no material impact from the acquisition to 1989 earnings – although Convergent lost $2.1m on sales of $199m in the first half of the current year – and expects a positive earnings impact thereafter from Convergent’s revenue growth and synergies in engineering, manufacturing, and third-party sales flowing from the merger. Burroughs was one of Convergent’s first two major OEM customers for its CTOS workstations, the other being NCR, and about 500,000 of these are installed worldwide, 300,000 of them by Burroughs and by Unisys.