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  1. Technology
February 8, 1999


By CBR Staff Writer

Computer Associates International Inc appears to be reconciled to bolstering its services expertise little by little rather than in one big bite and is to pay $435m or $28 per share for middle market integrator Computer Management Sciences Inc. The Jacksonville, Florida company earned $12.4m on sales of $90.2m last year and CA’s offer represents a 19% premium over CMSI’s closing price of $23.50 last Friday. The acquisition is a far cry from the $9bn CA was prepared to pay for Computer Sciences Corp last year, a pursuit that CA eventually abandoned after CSC rejected its advances and a the ensuing battle for control turned ugly. The acquisition of CMSI is part of its Plan B, CA said. CMSI will become part of CA’s global professional services unit. All 950 CMSI employees will transfer to CA, which will have around 3,000 services staff after the acquisition. CMSI claims that it wasn’t for sale when initially approached by CA but said the value proposition for customers soon became evident. CA says it will continue to grow its services business organically and through acquisition in the near-term. It plans to beef up its services presence in Europe by expanding the number of systems outsourcing centers which CMSI maintains. CMSI has eight centers now. CA’s plan is to add a dozen in the US and a dozen internationally. The networked centers provide repositories of reusable applications and other software components. CSMI uses a proprietary evolution methodology to design and deliver services and has some well-regarded application development skills. CA is hoping that CMSI will spur the sale of its Unicenter TNG systems management software and Jasmine object database into enterprises. CMSI says its projects range from $250,000 to $10m in size CMSI is CA’s fourth services acquisition in 12 months following Realogic Inc, LDA Systems Inc and Aventura Systems ASA. CA already has secured agreements for the purchase of 34% of CSMI’s shares. Merrill Lynch & Co is concerned that CA’s focus on the lower margin services business will hurt long-term earnings prospects. CA wants to generate a third of its revenues from consulting services.

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