EDS Withdraws Buyout Offer

Electronic Data Systems Corp. said it withdrew a $700-million offer to buy Policy Management Systems Corp. after examining the insurance software company’s confidential financial data. The development clears the way for struggling Policy Management to pursue a previously planned $600-million deal with private investment company Welsh, Carson, Anderson & Stowe. But shares of Policy Management plunged $5.38, or 34%, to close at $10.56 in heavy Nasdaq trading, as investors feared the issues that made EDS walk away from a deal could also prompt Welsh Carson to cut its price or terminate the agreement. Both Policy Management and EDS declined to comment. Welsh Carson could not be reached for comment.

Columbia, S.C.-based Policy Management has been faced with deteriorating results in its bank consulting business and the loss of key customers due to a failure to keep pace with new ways to conduct business over the Internet. In January, it unveiled plans to change its name to Mynd. Shares in Plano, Texas-based EDS rose $1.88 to close at $63.13 .