Computer Associates Drops Bid Company Won’t Extend Offer To Buy Computer Sciences Corp.

Computer Associates International Inc. ended its battle to take over Computer Sciences Corp. on Thursday, saying it will let its $9.2 billion buyout offer die.

The demise of what would have been the computer industry’s second-largest merger ever sent Computer Sciences stock tumbling 11 percent while boosting Computer Associates shares by 3 percent.

Computer Associates, the leading maker of business software, said its $108-per-share offer will not be extended after it expires March 16. The bid includes several provisions, such as eliminating Computer Sciences’ anti-takeover defense, that Computer Sciences wouldn’t negotiate.

Computer Associates chairman Charles Wang said he decided to back out rather than engage in a long legal fight for control of Computer Sciences. He said there are no realistic circumstances under which the bid would be revived.

“I want to walk away on this thing, and we’ll … just go on,” Wang said in a phone interview.

Computer Associates’ bid was doomed from the start, said Stephen McClellan, an analyst with Merrill Lynch & Co.

“It was a self-defeating, destructive process from the beginning that CA was undertaking,” McClellan said. “You just can’t do a hostile takeover of a major computer services company and make it work, given the sensitivity of the employees and the very fragile customer relationships.”

Earlier in the day, Wang released a sharply critical letter sent to Computer Sciences boss Van Honeycutt.

“It was always my impression that the real issue was price. It now appears that … you decided that no price we offer would be high enough,” Wang wrote.

“For whatever reason, it seems you would rather risk harming CSC’s business and in the process diminish its value, than negotiate with Computer Associates,” the letter said.

Computer Sciences, in a statement, called upon Computer Associates to immediately terminate its current offer.