McDonnell Douglas Corp says it decided to sell McDonnell Douglas Information Systems International Ltd rather than float it (CI No 2,078) because it will be able to generate more cash that way – important when making money in its key markets, defence and civil aviation, is becoming increasingly difficult. But flotation of Information Systems is […]
McDonnell Douglas Corp says it decided to sell McDonnell Douglas Information Systems International Ltd rather than float it (CI No 2,078) because it will be able to generate more cash that way – important when making money in its key markets, defence and civil aviation, is becoming increasingly difficult. But flotation of Information Systems is still not out of the picture, with 1994 being forecast as the big year. McDonnell Douglas was not prepared to disclose any financial details of the proposed sale, which is being undertaken by brokers S G Warburg & Co and J P Morgan & Co. But the chief executive of Information Systems, Jeremy Causley, did say that the debt to equity ratio would be well within the normal 2:1 demanded by the banks, and observers say the deal must be worth over UKP200m. The former independent subsidiary will be bought out partially by its management, who will retain effective day-to-day control, and by Baring Brothers, along with a few blue-chip banks. Again, no details were forthcoming as to what percentage would be owned by whom. Information Systems will also be allowed to keep its name for the foreseeable future to save forking out on new liveries and to ensure continuity with its customers. To prepare for going public, the next 12 months will see the Hemel Hempstead, Hertfordshire company concentrating on building up its business, particularly in Europe, with the help of three ‘major’ new products. It will also market the software engineering tools it uses internally to build application software, and expressed a certain interest in acquisition, if anything suitable were to come along. The new products are all based on a ‘rapid application development environment’, which is claimed to be one stage on from a fourth generation language, and can be used to generate code very quickly. They comprise a payroll and personnel system; an international banking system, and an object-oriented fourth generation language, aimed at customers migrating from IBM Corp mainframes to client-server environments. The software runs on IBM AS/400s and mainframes, Digital Equipment Corp’s VAX machines and any version of Unix System V, but no pricing was available. It is modular in nature and will be shipped throughout 1993. Affairs at Information Systems will change very little as a result of the buy-out, because McDonnell has treated the business as a discontinued operation for three or four years now. No staff will be lost, and the company will still invest about 13% of its revenues on the research and development of applications software for its niche markets – which in the UK are the National Health Service, central and local government, the police force, plus libraries and banks.