Making an investment that promises to benefit both partners while putting out of joint the noses of all the other companies developing Systems Application Architecture-compliant applications, IBM late Wednesday announced that it had taken a 5% stake in Atlanta-based Management Science America Inc for $10.14m. IBM paid $11.50 a share for 882,060 new shares against a market price of $10.625. MSA lost $33.6m on sales of $250m in 1988, but analysts look for around $14m profit this year, and the recasting and downsizing of the company – to cencentrate on SAA applications – is pretty much complete. Management Science said it will use the proceeds of the transaction for general purposes, including continued development of SAA-compliant applications. A jubilant Ed Holt, UK sales and marketing manager, stressed that the investment was not a lifeline for MSA – we have $45m cash, no debt, and a back-log of $140m, he said, adding that out of the 14 companies avowing SAA compliance at the OfficeVision launch, IBM was particularly comfortable with MSA’s progress. He also revealed that IBM would get a seat on the board, so that MAS will have closer access to IBM’s thinking on the evolution of SAA, so that its first fully-SAA-compliant – financial – product will now be out in 12 months, sooner than previously thought possible. For IBM, it achieves the objective of hurrying along an array of SAA compliant applications from the largest dedicated developer of mainframe applications, while MSA can tell its customers that when it came to SAA, MSA was the company that IBM favoured with an investment. Insiders at MSA control about a quarter of the equity, and the company rebuffed a proposal of marriage from Computer Associates Inc a few months back by saying it was determined to remain independent, and that in the event of a takeover, all the key staff would resign.
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