bms@ctnews.Convergent.COM (Bruce Schlobohm) (08/11/88)
The following is the press announcement that went out on the Analyst's wire just after the stock market closed today. UNISYS ANNOUNCED AN AGREEMENT IN PRINCIPLE TO ACQUIRE CONVERGENT, INC. BULE BELL, PA. -- August 10, 1988 -- Unisys Corporation and Convergent, Inc. announced today an agreement in principle for Unisys to acquire Convergent for $7.00 per Convergent share in a transaction that is expected to be 45% cash and 55% Unisys common stock. The structure of the transaction will be completed over the next several weeks. The transaction will involve the merger of Convergent and a wholly-owned Unisys subsidiary in which either Convergent or the Unisys subsidiary will be the survivor. Unisys will also reserve the right to alter the structure to be all cash or all stock. The agreement is subject to due diligence reviews, approval of definitive merger agreements by both Boards of Directors and Convergent shareholders, and customary federal regulatory approvals. Unisys Chairman and CEO W. Michael Blumenthal said "This transaction will transform a long-standing and successful alliance between our companies into a major new strategic thrust. Convergent will become a cornerstone of our rapidly growing business in distributed systems based on open industry standards and state-of- the-art networking technologies. Convergent's skills and expertise in engineering, manufacturing, and third-party sales will allow us to play a broader role in this market." Convergent's Chairman Paul C. Ely will join the Unisys Management Board reporting to Blumenthal and will assume the leadership role in the Unisys worldwide distributed systems business, helping to guide the design, engineering, manufacturing, procurement, logistics, third-party sales and marketing strategies for Unisys systems based on CTOS/BTOS, UNIX and DOS/OS-2 operating systems. Blumenthal said that "Ely's exceptionally broad experience as a computer executive, entrepreneur, and leader in both large and small company contexts will add significantly to Unisys senior management team." Cyril Yansouni, Convergent's president, will assume overall responsibility for Convergent, managing Convergent Technologies and Convergent Business Systems, reporting directly to Ely. Both will be headquarted at Convergent's facilities in San Jose. Blumenthal said, "Cyril's leadership has been a key factor in Convergent's improving performance, and we are confident he can make significant contributions to the success of Unisys. We are committed to Convergent's customers. We'll strive to expand Convergent's considerable OEM and third-party business. Their effort to serve independent business through Convergent Business Systems will continue as well." Paul Ely, Convergent's chairman, said, "This merger will provide a handsome and fair return to Convergent's stockholders and will give the entire Convergent team a uniquely attractive opportunity to play a big role in the industry trend toward distributed open systems solutions. Unisys has backed Convergent from the start, has succeeded worldwide with Convergent products and open systems, and accounts for about 20% of Convergent's revenues. Unisys has clearly committed its capital, energies and worldwide resources to the cause of open industry standards and sophisticated approaches to distributed processing. I believe our combination of strengths carries tremendous potential to help reshape the industry. Convergent and Unisys, and Mike and I share a common vision of what open distributed systems can mean for the future of business computing." Unisys projects that its distributed systems business will generate $1.7 billion in revenue in 1988, including systems, peripherals, software and services. Together as a combined company, Unisys and Convergent will save a distributed systems business which has annual revenue in excess of $2 billion a year. Unisys said it foresees no material impact from the acquisition to 1989 earnings and expects a positive earnings impact thereafter from Convergent's revenue growth and the substantial synergies in engineering, manufacturing, and third-party sales flowing from the merger. Unisys was a founding supporter of Convergent's leading edge networkable workstations, using [the] CTOS/BTOS operating system, which it both procures from Convergent and manufactures in its own plants around the world. About 500,000 of these systems have been installed worldwide, 300,000 by Unisys and another 200,000 by other Convergent customers. Unisys has opened the BTOS line to industry standard operating systems and communications standards and foresees significant growth for these products, as well as major recurring sales to the worldwide installed base. This year Unisys began marketing, as the U 6000/50, Convergent's new 386-based UNIX product, which has also enjoyed great success and will lead to a comprehensive family of 386-based UNIX systems. Blumenthal observed that "this merger signals a significant Unisys commitment to serve as a self-sufficient source of high-quality engineering and low-cost manufacturing for distributed systems. With Ely's leadership, we aim to provide the industry's leading products to both our direct and indirect customers around the world, and to secure enhanced margins from adding more value across the entire range of these computer systems."