SunGard Offers Guidance After Acquisition Of Comdisco

The see-saw battle for the business continuity assets of Comdisco between SunGard and Hewlett-Packard seems to be over as SunGard wins the prize.

On Monday, SunGard, based here, said the $850 million deal, $450 million of which consists of new bank debt, should have a modestly dilutive affect on the company's earnings through the first half of next year, and should be neutral to accretive to earnings in the second half of 2000.

"This acquisition ensures the presence of a strong, independent vendor focused on the best interests of all clients. We are more strategically focused than ever to build value for our shareholders," said James Mann, chairman and CEO of SunGard, in a statement.

SunGard officials estimate the acquired Comdisco assets had a revenue of $460 million and an operating margin of about 5 percent for the fiscal year ended September 30. This compares with SunGard Business Continuity and Internet Services' revenue of about $450 million and an operating margin of 30 percent in the same period.

SunGard's winning bid passed its final hurdle last Thursday when the U.S. Circuit Court of Appeals for the District of Columbia denied a motion by the U.S. Department of Justice to delay the close for antitrust purposes.

On July 16, the same day the parent company of Comdisco and 50 of its U.S.-based subsidiaries filed for Chapter 11 bankruptcy protection, HP signed an agreement to acquire most of Comdisco's Availability Solutions business. HP originally offered $610 million in cash for the services.

However, SunGard topped HP with a $825 million bid for Comdisco in October in a court-sponsored auction. HP responded with a $750 million bid which Comdisco officials originally accepted on October 30. However, on November 9, the U.S. Bankruptcy Court for the Northern District of Illinois found that HP's final offer was submitted outside the auction process, according to Comdisco officials.

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