CA buys Platinum in $US3.5 billion deal

Computer Associates International yesterday announced a bid to buy software maker and consulting services company Platinum Technology International in a cash tender offer worth around $US3.5 billion.

The boards of directors of both companies have approved the deal, in which a wholly owned subsidiary of CA will purchase all outstanding shares of Platinum's common stock for $29.25 a share, said Sanjay Kumar, CA's president and chief operating officer.

When CA approached Platinum, the company was emphatically not for sale, but last week, at the first meeting between Kumar and Platinum's top executive, the companies' compatibility was so evident that Platinum became open to persuasion, Kumar said.

Platinum's expertise in knowledge management, data warehousing, database tools and application lifecycle management complement the technologies in Jasmine, CA's object-oriented database, Kumar said. Platinum's data warehouse and repository technology might be particularly suited for integration into Jasmine, Kumar said, but declined to offer specifics, saying only that the companies' technology teams would meet over the coming weeks and make those decisions public at a later date.

Platinum's 1000-person services group was also attractive to CA, which launched its own services organisation, Global Professional Services, about a year ago and now employs around 3000 people, Kumar said. Platinum, 12 years old, has 120 offices on six continents and its consulting and implementation services, for Platinum products and other products, will enhance CA's existing service offerings, he said.

According to both Kumar and Andrew Filipowski, president and CEO of Platinum, there is very little product overlap between the two companies. Filipowski maintained that customers would continue to get support, even in areas of overlap, and Kumar characterised the overlap as being only in "one business that's not substantial".

An undisclosed number of present Platinum workers from its workforce of 1000 will be laid off, but two factors will mitigate the number, both executives maintained. Platinum underwent a reorganisation of its own in February, eliminating 1000 jobs, and CA has imposed a hiring freeze as of yesterday, to maximise the possibility of internal opportunities for present workers, both executives said.

"We're going to work to minimise the number of people who have to be made redundant," Kumar said.

The fate of Platinum's management team, including Filipowski, has yet to be determined. According to Filipowski, Platinum executives are willing to continue to work with CA, if that is what makes sense for the companies, but would not object to stepping aside if that made better business sense.

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