Parametric Technology Corp, the industrial and mechanical design software house, has stepped in to rescue the failing Computervision Corp which was slowly drowning under a mountain of corporate debt. The take-over deal, which is an all share offer and will be accounted for as a pooling of interests, values the distressed design automation software house at around $260m. Under the terms of the agreement, each of Computervision’s shares will be exchanged for 0.0866 shares in Parametric technology. Computervision represents the classic example of a leveraged buy out too far. The company was purchased by Prime Computer Corp in an initially hostile bid in 1988. It was then rescued from a further aggressive bid by J H Whitney in 1989, by which time the debt levels were building. And then in 1992 the combined entity reverted to the Computervision name following an IPO. The crux of this latest deal is that Parametric will be able to get its hands on Computervision’s big name client base. A client base which Computervision found itself increasingly unable to exploit as its financial distress deepened. Customers simply weren’t willing to commit to a long term partnership on the basis of such flaky financials. The deal also has an added sweetness for Parametric CEO Steven Walske, who was originally a Prime Computer Corp man who left the company over alleged differences of opinion. The companies are also linked through Parametric’s founder, Samuel Geisberg, who originally headed up Computervision’s development wing. The transaction, subject to approval, should close in January 1998.
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