Papers filed with the US Securities & Exchange Commission, and quoted in Computer Reseller News the other day, show Legent Corp chief executive Jerre Stead’s claim that he didn’t talk to Computer Associates International Inc, or get feelers from it about a possible acquisition before April 30 (CI No 2,683), to be untrue. So touchy […]
Papers filed with the US Securities & Exchange Commission, and quoted in Computer Reseller News the other day, show Legent Corp chief executive Jerre Stead’s claim that he didn’t talk to Computer Associates International Inc, or get feelers from it about a possible acquisition before April 30 (CI No 2,683), to be untrue. So touchy was Stead with our sister paper Unigram.X over suggestions to this end that he threatened to turn the matter over to company lawyers if it indicated differently. However, the recently-filed papers record meetings between Computer Associates chief operating officer Sanjay Kumar and Stead in Washington DC on April 26, and then again on April 30 at Kumar’s request, to discuss the acquisition. Moreover, it appears that Computer Associates’ approach this April followed a failed attempt to win Legent’s hand last summer – before Stead came on board – when an acquisition proposal, again delivered by Kumar, was rejected by Legent’s board. Meanwhile, the Department of Justice, currently investigating the anti-trust implications of the proposed acquisition, has reportedly received complaints from users of IBM Corp’s VSE low-end mainframe operating system – the original Disk Operating System introduced in 1965 – which some observers say Big Blue has been trying to close the lid on for the last 15 years. Their concern is that if the acquisition goes through they will have little choice but to rely on a single supplier for much of their tape and disk management requirements. Legent’s VSE customers are especially concerned they will lose the level of support they currently enjoy. Net traffic prompted Stead to post a message to the VSE newsgroup trying to allay some of the concern. IBM reckons that there are still 35,000 systems out there running VSE.
Other attention is focused on the future, in a combined company, of Legent’s licensing policies which, if the deal goes through, Computer Associates will be legally bound to honour. Legent’s scheme grants perpetual rights to the use of its software for a one-time fee. Computer Associates, on the other hand, charges licence fees for a set amount of time, usually five-year increments. It is very unlikely that the authorities would go further than make sale of the VSE utilities to another company as strong as Legent a condition of allowing the deal to go through, but while the bid process, followed by a veto would be very destabilising to Legent, talk among analysts and insiders that if the deal fails then Legent is effectively dead in the water sound like typi cal Wall Street hysteria.