Justice Says It Wouldn’t Bar a Burroughs-Sperry Merger
In an unusually early decision, the Justice Department said Friday that it would not oppose a merger between Burroughs and Sperry. The ruling came amid speculation that the two computer makers had resumed negotiations.
Analysts believe that the Justice Department’s action adds to the mounting pressure on Sperry directors to capitulate to Burroughs, which launched a hostile $4.06-billion takeover bid for the News York-based computer maker on May 8. Sperry has ignored two friendly proposals from Burroughs, including one earlier this week for $75 a share, $5 a share higher than the current hostile tender offer.
Detroit-based Burroughs had asked the Justice Department to investigate whether a purchase of Sperry would violate a 1913 consent decree against Burroughs’ forerunner company. The department said it had “concluded that the (proposed) acquisition raised no antitrust problems.”
Companies Refuse Comment
But the department went a step further. It said that neither the 73-year-old decree, which prohibited Burroughs Adding Machine Co. from acquiring controlling interest in a competitor without a court’s prior approval, nor current antitrust law should block the acquisition.
Later Friday, Burroughs said it had been granted permission for the acquisition from the U.S. District Court in Detroit.
Both companies refused comment on speculation that negotiations had resumed, but analysts said the companies’ investment bankers and other “emissaries” had renewed talks.
The ruling itself didn’t surprise observers, who said it fits in with the government’s current laissez-faire attitude about big business mergers.
Justice Department approval “was a foregone conclusion,” said Thomas Crotty, a computer industry analyst at Gartner Group in Stamford, Conn.
But it is a “surprisingly early indication” of the government’s approval, said Thomas A. Papageorge, chairman of the Los Angeles Bar Assn.’s antitrust section.
Coming this early, said Crotty, the ruling “does aid (Burroughs Chairman W. Michael) Blumenthal’s cause. And it tightens the squeeze of Burroughs’ bear-hug on Sperry,” he added.
No ‘White Knight’ Yet
Sperry so far has had no luck in finding a “white knight,” another company that would snatch Sperry from Burrough’s grip, or for some means, such as taking on debt to buy another company itself, to diminish its value to Burroughs. But Crotty expects Sperry to continue the pursuit until the last minute. Burroughs’ tender offer expires June 5.
Sperry’s opened negotiations with Burroughs last weekend and later said it had expected a friendly, $80-a-share bid from its suitor. But when Burroughs responded last Monday with an offer of cash and securities valued at $75 a share, or about $4.35 billion, Sperry broke off talks.
So far, Sperry’s visible opposition to Burroughs has been mild. It has yet to file documents pertaining to its own “poison pill” offer to buy 29.5 million of its shares for $80 apiece that would kick in if Burroughs succeeds in buying about 53% of the company.
