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December 3, 1991


By CBR Staff Writer

The suggestion that a consortium was being put together in London to bid for Unisys Corp remained largely a single-sourced story from the original USA Today item, but although it comes as a bit of a surprise that Lord King, chairman of British Airways Plc should be named as heading the consortium – tagged HTIC presumably High-Tech Investment Co or Corp – such a bid is by no means out of the question, although all the identified parties none of which was saying anything – Charterhouse Bank Ltd, London; Edgar Neufeld, a former group director of IBM Europe; and Kenneth Smith, professor of chemical engineering at the Massachusetts Institute of Technology are not the first names that would spring to mind. One unidentified investor is said to be a major international computer company that is prepared to offer its expertise to enhance up Unisys’s technology and cost structure, giving it access to leading edge manufacturing know-how and new product technology. The Independent reckons that the computer company is Japanese but it would be uncharacteristic for a Japanese company to be part of a hostile takeover, although a negotiated acquisition agreement is not out of the question. Now that the world is moving to Unix, none of the Japanese majors can be ruled out on product conflict grounds, but Unisys already has strong ties to trader Mitsui & Co, to Mitsubishi Electric Corp and to Oki Electric Industrial Co, and weak ties to Hitachi Ltd. NEC Corp is probably prepared to wait and see if the political climate in France changes sufficiently for Groupe Bull SA to drop into its lap like a ripe plum, making one of the three with strong ties to Unisys already the most likely. The story said that Unisys chairman James Unruh was under pressure to discuss a proposed deal and that the buy-out price was unclear, but that suitors were said to have commitments for $500m in equity finance. Analysts put the break-up value of Unisys at $10 to $15 a share, and the story put $1.25 on the share price to $5 in heavy trading. Any consortium bid involving a Japanese company would be fraught with difficulties, because the new Unisys would still have to get rid of its Paramax Inc defence electronics subsidiary, and it has already failed to find a buyer and had to pull a public offering of shares in the subsidiary. Also the US Federal Government is a big user of 1100 OS mainframes and might well demur at these going to a Japanese company. It seems likely that any buyer would try to get rid of at least one if not both mainframe lines, possibly in management buyouts, although that course would again leave very weak businesses saddled with substantial debt.The alleged involvement of Lord King raises eyebrows inter alia because while Unisys is a major supplier of computers to the airline industry – the only one apart from IBM Corp – British Airways has always used IBM-compatible mainframes and software.

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