Computer Associates International Inc had little in the way of substance to add to the news of its proposed $1,750m acquisition of Legent Corp (CI No 2,672), declaring all organisational and integration issues effectively off limits until the deal closes, which should be early next month. But there is debate on exactly when the deal was hatched. The companies say the first discussions took place on the weeke nd of May 6, when Legent chief executive Jerre Stead was made an offer he could not refuse. Thereafter Stead canvassed other interest in Legent, finding no offers greater than the one Computer Associates had put on the table. A price was agreed at 10pm on Monday May 22. However, Unigram.X last week learned that third-party feelers identifying Computer Associates as a prospective buyer may have been received by Legent as early as April 10. Meantime, contrary to Legent’s claims that it had met Computer Associates for the first time in May, it appears that Stead met the company’s president and chief executive, Sanjay Kumar, back in February, just a few weeks into the job, and began exploring how Legent’s Extended Processing Environment distributed systems management products and the CA-Unicenter systems management suite could work together. There is also a hint that Computer Associates actually wrested Legent from the arms of another suitor at the last minute and was able to arrange a $2,000m credit line at the last minute thanks to friends over at Credit Suisse.
Pink slips
Executives from the two companies will be sweeping through Legent offices worldwide over the next few weeks offering new employment packages under Computer Associate’s ownership and handing out some pink slips – P45s, though neither company would put a figure on how many job losses there will be. Computer Associate chief executive Charles Wang pointed to the 500 openings that the company already has, saying the company would expand that requirement to sell Legent products. He described the acquisition as a way of jump-starting Computer Associates’s client-server effort, especially in field sales and in professional services where the company intends to build on Legent’s 300-strong professional services organisation to create a business it does not currently have. Computer Associates will create a single support organisation for the combined product lines and will put all of Legent products on to its licensing schemes. It maintains there is little overlap between its and Legent’s products, pointing to a Meta G roup study that suggests there is maybe 10% redundancy, mostly in areas such as storage management and data transfer. Kumar said CA-Unicenter and Legent products could be integrated within months of the deal closing. Stead meanwhile, maintained that there is no XPE architecture, describing the environment as just a vision that holds together some products. Funny, when Legent unloaded its vision on us in 1993 (CI No 2,280), we heard about a client-server glue based upon a three-year, $50m investment consisting of internally developed code, licensing agreements and acquisitions. After Morino Associates and Duquesne Systems Inc merged to form Legent in 1989, the company bought Business Software Technology in August of the same year, Goal Systems International and Spectrum Concepts in 1992, and CMA Software, Corporate Microsystems, Networx, Performance Technology, TeamOne Systems and National Dataguard Technologies in 1993. The two firms are betting that many of Legent’s 12,000 customers also have Computer Associate products and that they will be able to build on this base, though they are claiming they will not do a headcount until the deal goes through. Jerre Stead, who took over the reins at Legent Corp on Jan 1 of this year, said, I sold the company, implemented a new strategy and a new organisational structure in five months. I didn’t plan that. I did plan a new strategic direction over the next few years. Stead said he met with Sun Microsystems Inc boss Scott McNealy a couple of days before the acquisition to discuss
how Legent and Sun could partner, and says he thinks new owner Computer Associates will be able to see the relationship through to some kind of agreement. (A lthough McNealy denies it, he is said to have been annoyed that Stead did not cancel the meeting knowing Legent might go to Computer Associates, which is in league with Hewlett-Packard Co and Microsoft Corp). Stead will leave Legent and doesn’t expect to take up a new position until early 1996, he says he has already been approached by 14 employment agencies. He is expected to make up to $12m in stock options on the deal.
