Filer: Sterling Software, Inc.
Pursuant to Rule 425 under the Securities
Act of 1933
Commission File No. 1-8465
<TABLE>
<S> <C> <C>
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]
</TABLE>
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.
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."
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.
------
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:
o Computer Associates' preliminary prospectus, prospectus supplements,
final prospectus, and tender offer material.
o Computer Associates' Registration Statement on Form S-4 and Schedule
TO containing or incorporating by reference such documents and other
information.
o 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.
