Computer Associates International plans to strengthen its services unit with the acquisition of an IT outsourcing, consulting and systems integration company called Computer Management Sciences (CMS).
Valued at around $US435 million, this acquisition would be CA's largest in the services area so far, said Sanjay Kumar, CA's president and chief operating officer, yesterday.
The CMS acquisition is the latest step by CA to strengthen its Global Professional Services unit, which was created in April 1998 to meet a rising demand from clients for things like systems integration and application development, Kumar said.
CA clients have been telling the company that they "want us to come in and talk not only about the technology and products that we have but also go all the way in getting the projects done and deploying the technology," Kumar said.
CA's other acquisitions in the services area include Realogic, LDA Systems and Aventura Systems.
CMS's clients are mostly Fortune 1000 companies and include Coca-Cola, Lockheed Aeronautical Systems and Merrill Lynch, officials said.
CMS focuses on IT projects that range from $250,000 to $10 million in value and provides services like custom application development, systems integration and maintenance and IT outsourcing, officials said.
At CA, CMS will focus on projects involving CA's flagship Unicenter TNG systems management tool and CA's Jasmine object-oriented database, officials said.
"There's nothing but positives in this for us," said Anthony Weight, CMS's acting chief executive officer and co-founder, adding that his group will benefit from CA's marketing muscle, technology portfolio and name recognition.
In turn, CA plans to extend CMS's national network of outsourcing centres to Europe, Asia and Latin America. These so-called Systems Outsourcing Centres (SOC) provide service, offer training and develop applications, among other things.
The boards of directors of both companies approved the acquisition. CA will buy CMS with a cash tender offer, followed by a cash merger. CMS has more than 900 employees and CA plans to hire all of them.
CMS posted revenues of $90.2 million in 1998, a 27 per cent increase over 1997. Net income grew 34 per cent to $12.4 million in 1998, compared with the previous year.