Computer Associates International, tightening its grip on the corporate software market, said Monday it has agreed to buy rival Platinum Technology for US$3.5 billion. It will be one the biggest acquisitions ever in the software industry.
Computer Associates (CA), the third-largest US software firm, said it would pay $29.25 cash for each shares of Platinum, or just over triple the value of Platinum's closing share price on Friday of $9.88.
Shares of Platinum (PLAT), based in Oakbrook Terrace, Illinois, leapt skyward on the news, trading at $24.75 a share, or well over double Friday's closing Nasdaq price.
Computer Associates fell $1.63 to $32.81.
Computer Associates, with a 20-year reputation for swallowing up weaker rivals, said it would gain key data storage and database management products from the acquisition. These products would provide the data plumbing for large companies that need to keep track of mountains of data.
The firm said the acquisition would edge out IBM's purchase of Lotus Development as the largest deal in software industry history. IBM paid $3.5 billion for Lotus at the time the deal closed.
Computer Associates expects the deal to add 25 cents to its earnings per share in the first year after it closes, excluding certain charges.
The boards of both Platinum and Computer Associates have approved the transaction.
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