It looks as if Computer Associates International Inc is set for a bruising and bloody battle to win Computer Sciences Corp after CSC rejected CA’s $9.8bn takeover offer saying it is too low, and swallowed a complicated poison pill plan which will make it much more difficult for CA to win control of a majority of the CSC’s shares. CSC says it will formally respond to CA’s hostile tender offer of $108 per share by Feb 27. CA’s merger offer runs out March 16 but may be extended. CSC’s poison pill plan, described in an 8-K filing with the Securities and Exchange Commission gives shareholders the right to buy a certain class of new share equivalent to every share of common stock they currently hold on February 27 if triggered by certain takeover activity. CSC has also filed to include a further 150 executives in the new severance package plan it adopted for executive management on Tuesday. It has presumably found at least that many senior staff that would likely be immediately surplus to requirements in the event of a takeover. In his letter to CA CEO Charles Wang, CSC chief Van Honeycutt said We believe that CSC has far greater near- and long-term prospects than are reflected in your bid. It fears a CA acquisition would lower its standing with Wall Street and compromise CSC’s platform neutrality, and trigger the departure of key CSC employees.
