Proxicom tells Compaq to cough up more cash

Proxicom Inc., which had agreed to be purchased by Compaq Computer Corp. in April unless a better deal came along, said Wednesday that it has found just such a deal and that Compaq has until Monday to make a better offer.

In a statement that came only two days after Proxicom said that it was in talks with U.K.-based Dimension Data Holdings PLC, Proxicom said that Dimension Data Holdings had offered to purchase the company for US$7.50 per share, besting Compaq's offer of $5.75. Proxicom's agreement with Compaq allowed Proxicom to receive and negotiate other bids and if a better offer was received, Compaq would have three days to match it. If Compaq does not match the bid, Proxicom will pay a $10 million termination fee.

Proxicom's board has not yet changed or withdrawn its recommendation to shareholders that they approve the Compaq merger, the company's statement said.

The Compaq deal would have cost $266 million. The total value of Dimension Data Holdings' offering was not announced.

Compaq is attempting to acquire Proxicom to expand its global services offerings.

Compaq is evaluating its options and will take the three-day period to decide how to proceed, said Steve Seivert, a Compaq spokesman.

"We want to do what's in the best interest of the company," he said.