Computer Associates International Inc. has agreed to acquire Platinum Technology International Inc. in a cash deal valued at more than $3.5 billion, making it the largest transaction in the history of the software industry, according to CA.
CA's bold move appears to be the Islandia, N.Y.-based company's latest attempt at acquiring a large service organization, which began in earnest with last year's failed attempt to buy Computer Sciences Corp.
Platinum provides software products and consulting services that help global companies manage and improve their IT infrastructures--including systems and database management, electronic commerce, application infrastructure management, data warehousing, knowledge management, decision support and year 2000 re-engineering, CA said. The 12-year-old company has more than 120 offices across six continents.
"This transaction provides tremendous synergies in products, markets and services with very little overlap, creating exciting growth opportunities for CA in many new and emerging markets," said CA President and Chief Operating Officer Sanjay Kumar in a statement. "Platinum's leadership in knowledge management, data warehouse, database tools and application life-cycle management perfectly complements the E-commerce management and development technologies embodied in Jasmine, CA's object-oriented database. By enabling organizations to easily create knowledge portals, CA will become the premier end-to-end solutions provider for building and deploying enterprise applications."
Under the merger plans, which have been unanimously approved by the boards of both companies, a wholly owned subsidiary of CA will offer to purchase all outstanding shares of Platinum common stock for $29.25 per share.
Platinum shares closed Friday at $9.88 per share.
CA will fund the acquisition through a $4.5 billion credit facility underwritten entirely by Credit Suisse First Boston. This new facility will replace CA's existing $2.6 billion line of credit.
Kumar said many organizations around the world are "already enjoying the benefits of the integration between Platinum's best-of-breed point solutions and CA's flagship Unicenter TNG's management framework. We look forward to building a collectively stronger enterprise that can provide a broader range of solutions to clients, greater opportunities for employees from both companies, and accelerated near- and long-term shareholder return."
Platinum's wide-ranging consulting and implementation services also will complement CA's rapidly-growing Global Professional Services (GPS), CA said. Platinum's consultants will quickly extend GPS' capabilities, especially in Europe, where Platinum has a significant presence, according to CA.
In the tender offer, CA seeks to purchase at least a majority of Platinum's outstanding shares. Consummation of the tender offer will be subject to the expiration or termination of any applicable antitrust waiting period and the receipt of all regulatory approvals. Following completion of the tender offer, the subsidiary of CA will be merged into Platinum, and all of Platinum's shares not owned by CA will be converted into the right to receive $29.25 per share in cash.
CA estimates that following the completion of the merger and restructuring, this transaction will be accretive to net earnings in the first 12 months in the amount of about 25 cents per share, excluding in-process R&D and restructuring charges. In addition, the company anticipates that following the restructuring, the acquisition will generate an additional $450 million of cash from operations.