Compaq Computer Corp. scrapped its planned acquisition of Proxicom Inc. on Friday, saying it has decided not to compete with Dimension Data Holdings PLC's higher bid for the consulting firm.
Late last month, Compaq agreed to acquire Reston, Virginia-based Proxicom for US$266 million to expand its global services business. The acquisition agreement allowed Proxicom to consider higher bids from other suitors, however, and on Monday, Dimension Data tendered a $7.50 per share offer, topping Compaq's offer of $5.75 per share. Thursday, Proxicom officially recognized Data Dimension's offer as the better deal, giving Compaq three business days to beat the offer. That evening, a Compaq spokesman said the company would use the three-day period for deliberation on how to proceed, but less than a day later Compaq gave notice that it's walking away from the negotiating table.
Compaq will continue its strategy of aggressively building its services business, but "current economics" nixed upping its Proxicom bid, said Compaq Vice President of Worldwide Sales and Services Peter Blackmore in a prepared statement.
If Proxicom accepts Dimension Data's takeover bid, it will owe Proxicom a $10 million termination fee.