Filed by Computer Associates International, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14d-2
of the Securities Exchange Act of 1934
Subject Company: Sterling Software, Inc.
Commission File No. 001-08465
Filed by Computer Associates International, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14d-2
of the Securities Exchange Act of 1934
Contacts:
Bob Gordon, CA public relations Doug Robinson, CA investor relations
(631) 342-2391 (631) 342-2745
[email protected] [email protected]
Cindy Foor, Sterling public relations Julie Kupp, Sterling investor relations
(214) 981-1000 (214) 981-1000
[email protected] [email protected]
COMPUTER ASSOCIATES TO ACQUIRE STERLING SOFTWARE
$4 Billion Stock Transaction to Continue to Fuel CA's Surge
In eBusiness Software and Services
Largest Acquisition in History of Software Industry
Expected to be EBITDA Accretive
Leading Supplier of Storage and Network Management,
EAI, Portals and Application Development
ISLANDIA, NY and DALLAS, TX, February 14, 2000 - Computer Associates
International, Inc. (NYSE: CA) today announced an agreement to acquire Sterling
Software, Inc. (NYSE: SSW), extending its arsenal of software and services to
build, deploy, manage and secure eBusiness solutions.
The $4 billion stock-for-stock acquisition, which would be the largest ever in
the history of the software industry, has been approved unanimously by the
Boards of Directors of both Sterling Software and CA. The acquisition is
expected to be accretive to CA's earnings per share, excluding any one-time
research and development charge and amortization of acquisition intangibles, and
is subject to certain closing conditions, including regulatory approvals. The
acquisition will be accounted for using the purchase method.
Under terms of the agreement, a subsidiary of CA will commence an offer to
exchange 0.5634 shares of CA stock for each outstanding Sterling share. The
exchange ratio is subject to a collar. If the average trading price of CA stock
for the designated period prior to the closing of the offer is greater than
$77.12, the exchange ratio will be reduced so that each Sterling share tendered
in the offer would be exchanged for $43.45 worth of CA stock. If the average
trading price of CA shares for the period is less than $63.10, the exchange
ratio will be increased so that each Sterling share tendered in the offer would
be exchanged for $35.55 worth of CA stock. In this case, CA may elect to reduce
the exchange ratio and make up the difference in cash and or stock. The tender
offer will be followed by a back-end merger on the same terms of those in the
offer. The offer will be subject to customary closing conditions, including that
at least a majority of Sterling's outstanding shares has been tendered and
antitrust clearance obtained. The parties expect the transaction will be one of
the first to take advantage of the SEC's new "fast track" exchange offer rules
designed to expedite stock-for-stock transactions.
<PAGE>
Sterling Software solutions are deployed at more than 20,000 customer sites
worldwide--including 90 percent of Fortune 100 companies--to create, control,
automate and manage both traditional and eBusiness systems. Sterling Software's
award-winning portal technology provides access to data stored in corporate
databases, in the same way that Internet content portals provide access to the
wealth of content on the Web.
The anticipated acquisition will expand CA's broad array of products and
services, while accelerating their delivery. This will enable all companies --
from the newest "dot coms" to established brick-and-mortar businesses - to
continue to exploit the latest opportunities driven by the Internet economy.
CA plans to enhance Sterling Software products with its industry-leading
technology, including information visualization, Neugents neural network
technology and infrastructure management solutions, providing clients with the
world's most powerful and complete environment for end-to-end eBusiness.
In particular, the combination of Sterling Software's COOL suite and CA's
Jasmine ii information infrastructure will deliver the most sophisticated and
personalized enterprise application integration solution on the market.
"The merger of Sterling Software and CA brings together two outstanding
organizations that share common values, and have compatible strategies and track
records of achievement," said Charles B. Wang, CA chairman and CEO. "We look
forward to providing an even broader range of eBusiness solutions to clients,
greater opportunities for employees, and accelerated near and long-term return
for shareholders."
"This merger will be extremely beneficial to our clients and employees," said
Sterling L. Williams, president and chief executive officer of Sterling
Software. "We have a deep appreciation for CA's commitment to quality,
innovation and customer service, all in a corporate culture that is incredibly
complementary to ours. Together, we'll be able to offer the best products and
services for clients of both companies, as well as new and exciting career paths
for employees."
The merger will create the industry's largest supplier of storage management
technology, with solutions that cover the entire enterprise from OS/390 and
distributed systems to desktops and even laptops. These will include the
industry's leading distributed backup and recovery products, as well as Storage
Area Network solutions unprecedented in their breadth and scope.
Customers from both companies will also benefit from increased delivery of
Sterling Software solutions through CA's extensive global sales organization,
including both direct and indirect channels.
"We are extremely focused on being the leading provider in storage and network
management, business intelligence and portal solutions, and in the design,
deployment and integration of enterprise applications," said Sanjay Kumar, CA
president and COO. "CA's business, built on a combination of world-class
technology and high value-added consulting services, will immediately benefit
from complementary technology and services from Sterling Software. The combined
company will be able to exploit the incredible opportunities of the Internet era
by continuing to deliver superior value for our clients."
<PAGE>
Sterling Software clients and partners will be invited to attend CA-World, CA's
annual user conference from April 9-14 in New Orleans, in place of the Sterling
Software Worldwide Customer Conference. CA also intends to publish papers on
product development strategies and directions shortly after completion of the
acquisition.
Founded in 1981, Sterling Software reported $807 million in revenues in fiscal
1999. The company has recorded 45 consecutive quarters of revenue and earnings
per share growth.
CA was advised on this transaction by the law firm of Covington & Burling and by
the investment banking firm of Morgan Stanley Dean Witter. Advisors for Sterling
Software were the law firm of Skadden, Arps, Slate, Meagher & Flom LLP and the
investment banking firms of Goldman Sachs and Co. and Broadview International
LLC.
Sterling Software is a leading provider of software and services for the
application development, business intelligence, information management, storage
management, network management, VM systems management, and federal systems
markets. The company is one of the 20 largest independent software companies in
the world. Headquartered in Dallas, Sterling Software has a worldwide installed
base of more than 20,000 customer sites and 3,800 employees in 90 offices
worldwide. For more information on Sterling Software, visit the company's Web
site at www.sterling.com.
Computer Associates International, Inc. (NYSE: CA), the world's leading business
software company, delivers the end-to-end infrastructure to enable eBusiness
through innovative technology, services and education. CA has 18,000 employees
worldwide and had revenue of $6.3 billion for the year ended December 31, 1999.
For more information, visit www.ca.com.
###
All referenced product names are trademarks of their respective companies.
Statements in this release concerning the Company's future prospects are
"forward-looking statements" under the Private Securities Litigation Reform Act
of 1995. There can be no assurances that future results will be achieved, and
actual results could differ materially from forecasts and estimates. Important
factors that could cause actual results to differ materially include: the
significant percentage of CA's and Sterling Software's quarterly sales
consummated in the last few days of the quarter making financial predictions
especially difficult and raising a substantial risk of variance in actual
results; the risks of potential litigation arising from the Year 2000 date
change for computer programs; the emergence of new competitive initiatives
resulting from rapid technological advances or changes in pricing in the market;
the risks associated with new product introductions as well as the uncertainty
of customer acceptance of these new or enhanced products from either CA,
Sterling or their competition; risks associated with the entry into new markets
such as professional services; the risks associated with integrating newly
acquired businesses and technologies; increasing dependency on large dollar
licensing transactions; delays in product delivery; reliance on mainframe
capacity growth; the ability to recruit and retain qualified personnel; business
conditions in the client/server and mainframe software and hardware markets;
uncertainty and volatility associated with Internet and eBusiness related
activities; use of software patent rights to attempt to limit competition;
fluctuations in foreign currency exchange rates and interest rates; the
volatility of the international marketplace; and other risks described in
filings with the Securities and Exchange Commission.
---
<PAGE>
We urge investors and security holders to read the following documents, when
they become available, regarding the exchange offer and the merger (described
above), because they will contain important information:
- - Computer Associates' preliminary prospectus, prospectus supplements, final
prospectus, and tender offer material.
- - Computer Associates' Registration Statement on Form S-4 and Schedule TO
containing or incorporating by reference such documents and other information.
- - Sterling Software's Solicitation/Recommendation Statement on Schedule 14D-9.
These documents and amendments to these documents will be filed with the United
States Securities and Exchange Commission.
When these and other documents are filed with the SEC, they may be obtained free
at the SEC's web site at www.sec.gov. You may also obtain for free each of these
documents (when available) from Computer Associates by directing your request to
Investor Relations at www.ca.com/invest/questions or by fax at 631-342-6864, or
from Sterling Software by directing your request to [email protected] or by
fax at (214) 981-1215.
(Computer Associates International, Inc.) Logo
(Sterling Software, Inc.) Logo
Computer Associates
To Acquire
Sterling Software
Fuels CA's eBusiness Surge
February 14, 2000
<PAGE>
(Computer Associates International, Inc.) Logo
(Sterling Software, Inc.) Logo
CA/ Sterling Combination
- - $4 Billion stock purchase transaction
- - Fixed exchange ratio of 0.5634 shares of CA for each SSW share inside collar
- - Collar is plus or minus 10% of $70.11 (10 day average of average high / low
for CA)
- - Fixed value for each SSW share outside collar (variable exchange ratio)
- - Maximum value is $43.45 per SSW share
- - Minimum value is $35.55 per SSW share
- - CA has option to contribute cash or stock for the difference between actual
SSW share price and the minimum collar amount value
<PAGE>
(Computer Associates International, Inc.) Logo
(Sterling Software, Inc.) Logo
CA/ Sterling Combination
- - Extends CA's eBusiness offerings:
- - Cutting edge eBusiness intelligence tools
- - Leader in enterprise application development tools
- - High end storage management
- - OS/390 network management
- - Expands CA's US Federal business
<PAGE>
(Computer Associates International, Inc.) Logo
(Sterling Software, Inc.) Logo
eBusiness Intelligence
- - Eureka product family provides a complete range of business intelligence
solutions for eBusiness and B2B information exchange
<PAGE>
(Computer Associates International, Inc.) Logo
(Sterling Software, Inc.) Logo
eBusiness Intelligence
- - Eureka:Portal
- - Simple, intuitive access to business intelligence
- - Provides personalized web services
- - Synergistic with CA's existing EAI infrastructure solutions
<PAGE>
(Computer Associates International, Inc.) Logo
(Sterling Software, Inc.) Logo
eBusiness Intelligence
Powerful eBusiness solution with combinationa of CAs proven infrastructure and
Neugent technology.
<PAGE>
(Computer Associates International, Inc.) Logo
(Sterling Software, Inc.) Logo
Application Development
- - Sterling leader in Enterprise Application Development
- - more than 5,000 customers
- - more than 500 ISV's
- - COOL:BIZ, GEN, PLEX, JOE solutions promote "e-volution"
<PAGE>
(Computer Associates International, Inc.) Logo
(Sterling Software, Inc.) Logo
Application Development
- - eBusiness fueling new breed of applications
- - Customers expect every transaction to be digital and instant
- - COOL:Joe - 100% Java environment for enterprise Internet applications
- - Leverage
- - Jasmine Internet infrastructure
- - CA services
- - Deliver
- - Personalized web experience
- - EAI
<PAGE>
(Computer Associates International, Inc.) Logo
(Sterling Software, Inc.) Logo
OS/390 Market
- - Re-emerging as eBusiness server
- - Internet driving exponentially increased transactions
- - CA enables OS/390 as an open systems eBusiness platform
<PAGE>
(Computer Associates International, Inc.) Logo
(Sterling Software, Inc.) Logo
Storage Management
- - Internet and eBusiness driving unprecedented demand for storage
- - Sterling's storage business fastest growth in market
Source: Sterling Software
<PAGE>
(Computer Associates International, Inc.) Logo
(Sterling Software, Inc.) Logo
Storage Management Areas
Platforms: OS/390 Distributed
Disk Mgt SSW CA
Off-line Media (tape & optical) CA CA
Sterling's SAMS product family completes CA's market leading storage management
offering
<PAGE>
(Computer Associates International, Inc.) Logo
(Sterling Software, Inc.) Logo
Storage Management Areas
Replication CA
High Availability CA
Mobile Storage Mgt SSW
Storage Event Mgt CA
File Differencing SSW
True end-to-end storage to enable eBusiness
<PAGE>
(Computer Associates International, Inc.) Logo
(Sterling Software, Inc.) Logo
Storage Management Areas
SAN solutions:
SAN mgt CA
High speed backup CA
Server-less backup SSW
Heterogeneous file sharing SSW
<PAGE>
(Computer Associates International, Inc.) Logo
(Sterling Software, Inc.) Logo
Network Management
- - SOLVE:Netmaster
- - Only solution for OS/390 and TCP/IP
- - Manages both sides of the Net
- - Complements CA's leading network management solutions for distributed
platforms
<PAGE>
(Computer Associates International, Inc.) Logo
(Sterling Software, Inc.) Logo
US Federal Business
(Image)
- - 1,170 services professionals
- - Key contract areas:
- - Intelligence
- - Air traffic (FAA investing $15 billion)
- - Secure communications
- - Weather systems
- - Studies and analyses
- - Command and control
- - Simulation training
<PAGE>
(Computer Associates International, Inc.) Logo
(Sterling Software, Inc.) Logo
US Federal Business
- - Synergistic benefits
- - Expands CA's existing Federal business
- - Opportunity to leverage CA's broad technology offering
- - End-to-End security - eTrust
- - Business and data modeling tools
- - Visualization
(Image)
<PAGE>
(Computer Associates International, Inc.) Logo
(Sterling Software, Inc.) Logo
Computer Associates
...enabling eBusiness
