Response mixed to CA's latest buyout

The Australian IT community delivered a mixed response to news of Computer Associates' $US3.5 billion takeover of Platinum Technology (PT) on Monday.

The acquisition, believed to be the largest ever in the software industry, came about as the result of discussions that got fast-tracked last Monday. Using a $4.5 billion line of credit from Credit Suisse First Boston, CA will acquire Platinum for $29.25 per share.

A selection of Australian PT users contacted by Computerworld, including John Loebenstein, chief general manager of IT at St George Bank, the Commonwealth Bank's CIO Howard Morris, and BHP, declined to comment on the acquisition.

Meanwhile a senior local banking source warned PT's clients to beware of Computer Associates' tactics, following the acquisition.

"If I was a user of PT products, I would be very wary of CA's early moves," said the source, who predicted that CA's sales force would be looking to lock PT users into long-term contracts.

"Bargain hard" advised the source, "Look for 80 per cent off [the list price]."

In response John Ruthven, managing director, Computer Associates Australia, commented, "I would like to raise the conversation above the granularity of licensing, to the big picture."

Ruthven said his focus would be on ensuring CA and PT customers were achieving competitive advantage.

Chris Morris, vice president, Gartner Research, Asia Pacific, commented that "a lot of bad press" had surrounded previous CA takeovers, causing "fear and trepidation amongst users" in relation to ongoing product development and licensing issues.

Morris said that PT clients feared being "dragged into CA licensing agreements they don't want".

However, Morris said users could consider the acquisition as an opportunity to negotiate on licensing with CA, using CA's former bad press as a bargaining tool.

In regard to ongoing product development, Morris said he saw little overlap between the product sets of the two companies and suggested that the risk of CA failing to develop PT products was consequently low.

Merv Langby, senior analyst, IDC, said the acquisition was "definitely good news for users".

Langby described CA and PT as a "good match" in terms of their product offerings. He said the takeover represented "the meshing of [CA's] strong systems management and data management, which is becoming increasingly more relevant in the e-business environment, with Platinum Technology in the specific areas of data warehousing, business intelligence and sophisticated data administration tools. Put those together and they are the core elements of e-business solutions at the enterprise level."

Langby said PT's services business was an "obvious plus for CA", adding "The implementation of solutions in the new e-business environment virtually by definition requires vendors to back up product delivery with strong services capability".

Ruthven said PT's strong services arm "fits very neatly into our aim of growing services".

CA has been following a strategy of growing its services arm for some time, leading to the company's unsuccessful attempt to acquire service provider CSC in early 1998.

Both Ric Day, managing director, PT Australia, and Ruthven were buoyant at news of the takeover.

"I actually feel very positive about it," Day said, "There are tremendous synergies in our product areas."

Ruthven also highlighted product synergies saying that a key benefit of the deal was "the bringing together of two very complementary technology sets to benefit CA and PT clients".

Both Ruthven and Day said it was too early to comment on the implications of the acquisition for local operations.

Day anticipated that it would take between two and four months for the takeover to be ratified through US courts.

PT has 180 services professionals in Australia, plus 40 management and sales personnel.

Both Ruthven and Day said it was too early to comment on whether redundancies were a possibility.

Ruthven said that a hiring freeze would mitigate against that possibility.

Meanwhile, Sanjay Kumar, chief operating officer, CA, said yesterday that CA hopes to leverage Platinum Technology 's experience in data warehousing to build an enterprise-level knowledge portal based on CA's Jasmine object database.

Technology teams of the two companies will refine product plans in the next few weeks that integrate the company's offerings, Kumar said.