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October 12, 1995

IBM MUSCLES IN TO BREAK UP AMDAHL-DMR ACQUISITION PARTY

By CBR Staff Writer

All studs flashing, IBM Corp dived in to break up Amdahl Corp’s party with DMR Group Inc by making the best offer so far for the Canadian computer services company. IBM Canada Ltd is offering offering $Can11 for each class B share of DMR, against the agreed Amdahl bid of $Can8.25, and the $Can9.00 counter-offer from BDM International Inc. IBM has clearly set the marker price because DMR’s shares jumped $Can2.375 to $Can11.25, but the IBM offer is conditional on 90% acceptance by DMR’s class B shareholders, and a large portion of the class B shares have already been irrevocably tendered by DMR’s three major shareholders to Amdahl. But IBM Canada got the benefit of a decision on Tuesday in the Quebec Superior Court that allows DMR’s class A shareholders to convert their holdings into class B shares to take advantage of any takeover offer. BDM made an offer only for the class B shares, and under the corporate bylaws, class A shareholders would be allowed to convert to class B stock if a bid was made only for the B shares and such a conversion would sharply dilute the holdings of the three major shareholders. The conversion bylaws were upheld by the Quebec Superior court in the decision, but IBM has also structured its bid that depends on the conversion of the class A shares. Our corporate cultures and commitment to the customer are very compatible and our people know each other, and work together well, IBM Canada President Khalil Barsoum said. DMR, doing $225m a year and employing 2,800, would be operated as a wholly owned subsidiary by IBM and remain headquartered in Montreal. Amdahl said it will be appealing the Quebec Superior Court ruling on the A shares.

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