Computer Associates to Acquire Sterling
Computer Associates International Inc., a maker of software that improves computers’ performance, said Monday that it will buy Sterling Software Inc. for $4 billion in stock.
The purchase would give Computer Associates access to Sterling’s data storage management products, software for protecting and depositing corporate information, and tools for creating Web programs. Computer Associates is betting that businesses want a full range of software to operate computers and databases.
“Storage and networks are coming together,” Computer Associates President Sanjay Kumar said. “You need broad offerings to survive.”
Under terms of the deal, Computer Associates would exchange 0.5634 share for each Sterling share, or $39.05 a share and 7.7% above Monday’s close. The exchange is based on Computer Associates trading between $63.10 and $77.12.
Computer Associates is ranked first in the $2.7-billion storage software market, with 33% of the market, according to International Data Corp., a Framingham, Mass., market research firm. Sterling Software is ranked No. 5, with 3.4% of the market. It had $807 million in fiscal 1999 revenue.
On the New York Stock Exchange, shares of Islandia-based Computer Associates fell 44 cents to close at $69.31, and Dallas-based Sterling rose $1.81 to close at $36.25.
Storage management software has emerged as an important business as more corporations need to compile information to keep their Internet sites running. Storage management software lets companies monitor where different information is and how to retrieve it.
Terms of the transaction would be adjusted based on Computer Associates’ stock price. If the average stock price exceeds $77.12 for an undefined period before the transaction closes, Sterling shareholders would receive $43.45 worth of Computer Associates stock for each of their shares. If Computer Associates shares fall below $63.10, Sterling shareholders would get shares worth $35.55.
The companies did not say when the acquisition is expected to be complete.
