Legent Corp denied that its briefly-serving chief executive Jerre Stead had been shopping the company around, claiming that in Stead’s first ever meeting with Computer Associates International Inc boss Sanjay Kumar over the first weekend of May, he was simply offered a price so spectacular that he couldn’t refuse. Computer Associates plans to absorb Legent, strip it of overlapping personnel and functions – as it usually does with acquisitions – pare down its expenses and integrate the product line with its own. Legent management, led by chief executive Jerre Stead and some of the cronies he has brought over from the old days – some in only the last few weeks – are not expected to stay. Computer Associates said it regards the Legent product line, which is still focused on the mainframe market, as not overlapping its own. It is also apparently interested in what Legent has in the way of Unix and client-server software, although it’s not an area Legent has been willing to invest much in of late. Legent currently has 2,500 employees. Computer Associates expects to take a $700m to $800m charge in September because of the purchase – US accounting rules require acquiring companies to write off the value of purchased research and development immediately after the acquisition; the concept is similar to writing off goodwill, or the difference between the priced paid and the net asset value of the company acquired. Computer Associates says it will be reviewing the situation presented by Legent over the next couple of months to see how the company and its product lines can best be integrated.
