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January 3, 1988

LOCKHEED, McDONNELL IN WINGS AS PRIME MAKES HOSTILE $390m BID FOR COMPUTERVISION

By CBR Staff Writer

With $500m of cash earmarked for acquisitions burning a hole in its pocket, and two years of fruitless wooing behind it, Prime Computer Inc finally lost patience and on the Sunday after Christmas made a $390m bid for Bedford, Massachusetts neighbour Computervision Corp. The offer is $13.50 a share, $4.50 above the price in the market immediately before the bid, but well shy of the $20 high Computervision reached earlier in 1987. Computervision has not yet responded to the bid beyond saying that it will consider the offer with the help of its advisor Goldman Sachs & Co. In current market conditions, the move by Prime makes it a near certainty that Computervision’s independence is at an end, but there is a string of large customers led by planemakers McDonnell-Douglas and Lockheed that are likely to be interested, and Prime is likely to have to raise its offer to win the prize. With $500m in cash, Prime can afford to pay a little more, but president Joe Henson told Reuters that Prime is after acquisitions in other areas of the computer industry and simply wants to lock up Computervision first. The merger would enable Prime Computer to leapfrog Data General to annual sales of over $1,500m and give it the critical mass to survive the next couple of shakeouts. Despite its success with the British Medusa system actually owned by Computervision CAD/CAM currently accounts for just 16% of Prime’s turnover, but would be about 50% of the combined company, shooting Prime past Intergraph to second place behind IBM in CAD/ CAM. Prime stresses that Computervision users would not have to convert to Prime hardware – Computervision’s hardware currently consists of IBM 4300 or 9370 database processors, its own proprietary minicomputer, and Sun Microsystems workstations. Prime points out that Unix is increasingly a common factor in the two companies’ lines.

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