Data Processing to Be Bought by Compuware

By MARC BALLON

June 25, 1999 12 AM PT

TIMES STAFF WRITER

Data Processing Resources Corp., a rapidly growing Irvine temporary-staffing firm that supplies thousands of computer specialists to major corporations, on Wednesday agreed to be acquired by a Michigan company for $353 million.

The $24-a-share offer from Compuware Corp., a software and staffing services concern, was nearly double Data Processing stock’s price on Wednesday. On Thursday, the company’s stock surged 91%, the second largest percentage gain on all U.S. markets.

Data Processing shares closed at $23.38, up $11.13, as 5.7 million shares changed hands. Volume has averaged 218,288 a day over the last three months.

Chairman and founder Mary Ellen Weaver said she felt “bittersweet” about the sale. “The company had a good thing going,” she said. “It’s always sad to think what might have been, but this is great for the stockholders. We’re thrilled.”

Data Processing is one of the largest publicly held Orange County companies that is run by a woman.

It was founded 14 years ago by Weaver, a self-described “crummy typist” who worked her way up the management chain at several temporary-services agencies. Data Processing went public three years ago at $14 a share.

Weaver owns 17.8% of Data Processing, or 2.13 million shares, according to the company’s most recent proxy filing. That means she’ll receive $51.1 million, based on the $24-a-share offer.

Compuware is a publicly traded company based in Farmington Hills, Mich. It earned $349.9 million in its most recent fiscal year, on sales to $1.6 billion. As part of the deal, Compuware will assume $115 million in Data Processing debt.

The deal will allow Compuware to boost its number of technicians from 7,000 to 10,000 and expand its geographic reach into 17 new cities in the West, Southwest and Southeast.

The acquisition also bring’s Compuware’s technology services division several large customers, including AT&T; Corp. and Microsoft Corp.

The deal should benefit both companies, said Judith Scott, an analyst with Robert W. Baird & Co., a brokerage and investment banking firm.

“Compuware is buying a good company that fits very well with what they’re doing. This will certainly add to their earnings,” she said. “Data Processing got a very good price compared to its recent stock activity.”

The acquisition is part of a larger consolidation among information technology staffing companies, said Lehman Brothers analyst Bernard Picchi. “This is just the beginning,” he said.

Demand for the staffing services provided by Data Processing is exploding. The boom in electronic commerce and Y2K concerns, among other factors, has made computer scientists and programmers among the most sought-after people in the job market.

The shortage is exacerbated, analysts say, by the dearth of technologists coming out of American universities, and ceilings on the number of high-skilled immigrants who can obtain work visas in the United States.

Revenues for technical temporary staffing companies nationwide have more than tripled, from $5.7 billion in 1993 to $18.2 billion in 1998, according to Staffing Industry Report.

Those factors have helped make Data Processing an industry leader. Since going public in 1996, it has acquired 11 firms and greatly expanded its operations throughout the country. It now represents about 3,400 technology professionals nationwide through a network of 33 branch offices. Data Processing earned $11.3 million in its fiscal year, on revenue of $210.6 million.

Data Processing’s management team, including Weaver, is expected to stay in place, although some consolidation of administrative functions is expected. Officials at both companies said they have yet to determine how many jobs will be cut as a result.

However, Data Processing will lose its name within the next 12 months as it is integrated into Compuware’s operations, said Chris Norris, a Compuware spokesman.

Directors of both companies have approved of the acquisition.

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Profiles of Companies

Data Processing Resources Corp.

Service: Temporary technical staffing

Founded: 1985

Chairman/CEO: Mary Ellen Weaver

Headquarters: Irvine

Employees: 3,400

Annual sales: $210.6 million

Net income: $11.3 million

Compuware Corp.