Computer Associates International Inc. said Thursday it will let its $9.8 billion hostile bid for Computer Sciences Corp. expire March 16.
The announcement sent Computer Sciences shares plunging, pressuring its management to prove the computer-services company is better off on its own.
Computer Associates, an Islandia-based business software company, said it will look at other acquisitions because the likelihood of a protracted battle to win Computer Sciences would harm both companies. Computer Associates has tried various tactics–from a hostile tender offer to a lawsuit–to pressure El Segundo, Calif.-based Computer Sciences to sell.
Computer Associates may be trying a new tack in the bitter takeover contest. Computer Sciences, which helps install and run computer services, now must deliver on its promise of better-than-expected profit and persuade shareholders to turn down a bid that’s $14 higher than its current stock price.
“This could ignite a fire under CSC shareholders to act fast to get this done,” said Moshe Katri, an analyst at UBS Securities, who lowered his rating on Computer Sciences to “hold” from “buy.”
The effort by Computer Associates to buy Computer Sciences became public in February after several months of private negotiations.
Computer Sciences shares fell $11, to $94, on Thursday. The stock traded at $92.19 the day before CA announced its plan last month, and was in the mid-$80s for much of January. Computer Associates rose $1.37, to $48.94, on Thursday.
