Computer Associates International yesterday announced a bid to buy software maker and consulting services company Platinum Technology International in a cash tender offer worth about $US3.5 billion.
Both companies' boards of directors 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 per share, according Sanjay Kumar, CA's president and chief operating officer.
When CA approached Platinum, the company was emphatically not for sale, but last Monday, at the first meeting between Kumar and Platinum's top executive, the companies' compatibility was so evident that Platinum became open to persuasion, according to Kumar.
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. Kumar said that Platinum's data warehouse and repository technology might be particularly suited for integration into Jasmine but he 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. Twelve-year-old Platinum 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.
There is very little product overlap between the two companies, according to both Kumar and Andrew Filipowski, president and CEO of Platinum. Filipowski maintained that customers would continue to be supported, even in areas of overlap, and Kumar characterised the overlap as being only in "one business that's not substantial".
An undisclosed number of current 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 current 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. 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, according to Filipowski.