The board of Computer Sciences Corp has unanimously recommended that the company’s shareholders reject the advances of Computer Associates International Inc and not tender any of their shares in the $108 offer made by the software giant. CSC’s board met on Friday and, as expected (CI No 3,357), proposed a course of action in line with the position it’s held the past three weeks – no deal. In a letter to shareholders, CSC chief executive Van Honeycutt insisted that CA’s offer does not represent fair value for the company. Honeycutt also said the board will soon provide detailed information that substantiates that claim. He will be traveling around the country this week meeting with investors in an effort to garner support for his cause. CA has responded by announcing it will plow ahead with the tender offer and says it’s banking on a positive judgment in its Nevada lawsuit which challenges the legality of amendments made to CSC’s by-laws defense plan after CA’s bid became public. If the judge doesn’t uphold the amendments at a hearing on March 16, several major obstacles to the acquisition bid would be removed – including a provision that says a 90% majority (as opposed to a simple majority) is needed to make any shareholder-initiated by-law changes. In a filing with the Securities and Exchange Commission also on Monday, CSC said it will explore alternatives that would increase shareholder value, including engaging in discussions with other parties concerning an acquisition or partnership. It has been known for some time that CSC was open to the possibility of a white knight suitor, but thus far none have emerged. In related news, CA has been slapped with a class action suit by shareholders who are angry about CA having concealed its ongoing attempts to acquire CSC. When the bid became public, CA shares fell nearly 13% to $50.75 in one day.
