Compuware, Viasoft Call Off Their Merger

Compuware Corp. and Viasoft Inc. last week terminated their proposed merger.

The move resulted from continuing uncertainty and litigation costs arising from a U.S. Department of Justice civil suit seeking to block the merger on antitrust grounds, according to statements from both companies.

Compuware, a $1.6 billion mainframe vendor in Farmington Hills, Mich., announced its bid to buy Viasoft, a $104 million rival in Phoenix, last July.

"I'm not surprised at all," said David Floyer, an analyst at IT Centrix, a consultancy in Boston. In addition to the government pressure, "I think there was enormous user pressure [against the merger] as well," Floyer said. Users are becoming very sensitive to moves that could lead to monopoly situations, he said.

The DOJ's antitrust division sued to block the purchase in October, claiming that the proposed $167 million merger would result in higher prices for testing and debugging tools used in mainframe software development, monitoring and failure management.

"The board of directors did not believe that continuing the litigation, with its inherent risks, substantial costs and potential irreparable damage to our business and relationships with customers, distributors and employees, was in the best interests of Viasoft shareholders," said Steven D. Whiteman, chairman, president and CEO of Viasoft, in a press release announcing the move.

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