Burroughs and Sperry Call Off Merger Talks
Burroughs Corp. and Sperry Corp. ended merger talks and blamed each other Monday for failing to negotiate a $3.7-billion deal that would have created the world’s second-largest computer manufacturer.
Sperry rejected a plan that would have maintained separate large-computer technologies and marketing organizations while merging the companies’ procurement, manufacturing, engineering, research and administration, Burroughs said.
Burroughs Chairman W. Michael Blumenthal responded to a Sperry request for more information by saying his company’s offer had been withdrawn, Sperry said.
“Although Burroughs regrets that Sperry did not accept its offer, Burroughs will continue its successful program of growth through internal expansion, acquisitions and other opportunities which present themselves,” Burroughs said in a news release.
Exchange of Stock
Sperry said Burroughs proposed exchanging $65 worth of Burroughs stock for each share of Sperry stock, under the condition that no less than one share nor more than 1.18 share of Burroughs stock would be given for each Sperry share.
“At any price of Burroughs stock at $55 or less, Sperry shareholders would receive less than $65 in value,” said Peter Hynes, Sperry spokesman.
At $65, Burroughs would have paid about $3.7 billion for Sperry’s 56.4 million shares.
Detroit-based Burroughs’ shares dropped $4 to $55.25 after the announcement Thursday that it was discussing a merger with New York-based Sperry. Burroughs closed Monday at $56.125 a share, up 87.5 cents, after the companies said they had dropped their merger talks.
Sperry topped the New York Stock Exchange’s most-active list, dropping $4.125 to $51.375 a share.
Sperry, in a statement read by Hynes, said its directors had instructed management to ask Burroughs for “more information to allay customer-base and antitrust concerns.”
“However, when this was conveyed to Mr. W. Michael Blumenthal, Burroughs’ chairman, he informed Sperry that the Burroughs offer had already been withdrawn,” the statement said.
The talks ended late Sunday, said Jeanette Lerman, Burroughs vice president-corporate communications.
Lerman attributed last week’s decline in the stock’s value to low profits throughout the computer industry and analysts’ misunderstanding that the companies would have merged their technology.
“Analysts also believed that Burroughs and Sperry would have combined their huge computer mainframes into one uniform mainframe. They felt that would have been too costly, but the fact is we didn’t plan on doing that,” Lerman said.
The companies’ large computers are incompatible in their internal design.