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June 2, 1987


By CBR Staff Writer

Behind the agreement for Computer Associates International Inc to acquire Uccel Corp for about $780m in shares (CI No 693) lies veteran Swiss investor Walter Haefner, whose privately-held Careal Holdings AG of Zrich has 58% of the Uccel shares. The agreement is a significant coup for the 76-year-old investor, who has stuck by Uccel – the former Wyly Corp, whose current name is derived from its former University Computing Company – notably through a disastrous foray in the 1970s into long-distance data transmission with a company called Datran that built a string of microwave towers across the US before going bust. It blamed AT&T Co for its lack of success, and won some consolation in court for its failure. The price being paid for Uccel – a 43% premium over the price in the market before the announcement, valuing the company at 30 times current profits – looks steep, but the market seems happy enough with it. Acquiring companies usually see their share prices dip sharply, but Computer Associates’ price fell only 87.5 cents to $27.125 on the announcement. The merged company will dominate the third party IBM mainframe system software market, and its creation will cast a dark shadow over the remaining independents in the field, acquisitive Sterling Software, Cullinet Software, Pansophic Systems, privately-held Cincom Systems, and Software AG Systems. Another leading player, Applied Data Research, has fallen to Chicago phone company Ameritech, and the agreement between Uccel and Computer Associates makes further consolidations much more likely. Analysts reckon that Uccel and Computer Associates are growing so fast that combined sales this year are forecast to reach $650m to $700m, compared with $450m in 1986.

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