CA Extends $4 Billion Bid for Sterling

FRAMINGHAM (03/20/2000) - Computer Associates International Inc. today said it was extending by one week - until Monday, March 27 - its offer to buy Dallas-based Sterling Software Inc. to give the U.S. Department of Justice more time to complete its regulatory review of the deal. CA said the government was specifically reviewing additional documents and information pursuant to federal antitrust laws. The $4 billion stock swap offer had been set to expire at midnight.

CA, a maker of enterprise management software, database tools and utilities, said the acquisition of Sterling will expand its broad array of products and services, while accelerating their delivery. CA said the merger will create the industry's largest supplier of storage and network management technology and products that cover the entire enterprise from OS/390 and distributed systems to desktops as well as laptops.

For example CA plans to integrate Sterling's portal product Eureka: Suite with its Neugents neural network product and Jasmine ii, its application development software. In a statement, Islandia, N.Y.-based CA said that under the extension, holders of Sterling common stock have until midnight EST, March 27, to either tender, or offer, their shares as part of the deal, or withdraw their shares from the deal. CA said to date 31.6 million Sterling shares have been tendered and not withdrawn.

Under the terms of the acquisition, which CA called the largest in the history of the software industry, CA will exchange 0.5634 shares of stock for each outstanding share of Sterling stock.

Although CA had said it wanted the merger and integration completed prior to CA World, the company's annual conference next month, company spokesman Bob Gordon said there really is no set time for getting the deal done. He said CA was continuing to push forward on the merger.

Richard Ptak, an industry analyst at Hurwitz Group Inc. in Framingham, Mass., said he was surprised the government was looking at the merger with an eye to federal antitrust laws.

"This throws up a red flag that the government is trying to build an antitrust case," Ptak said. "But I don't think think they have a case that this merger will shrink the market and cut down on choices in the market. I don't see anything obvious. Although they could be looking at the OS/390 setup to make a case that there will be a decrease in the number of options in the mainframe space."

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