SunGard linked with Misys bid

After one services giant, CSC, withdrew itself from a potential sale, another, Misys, is declining to comment on stories suggesting it could be acquired by SunGard.

CSC said in April that it would explore strategic alternatives but has now said that the exploration is complete and rather than pursuing a sale it will begin a $2bn stock repurchasing programme. The shares buyback underlined its confidence in remaining independent, the firm said.

“We are very optimistic about the company’s prospects and excited by the opportunities we see for continued growth,” said CSC chief executive Van Honeycutt. “New technologies, new markets and new market demands are reshaping the information technology industry, and we’re confident that CSC will remain a leading player in this space.”

In a research note, Richard Holway of analyst firm Ovum wrote: “If CSC had indeed been purchased - be it by private equity or a trade purchaser - it would have constituted one of the biggest consolidations in the IT services space. One has to conclude that no buyer thought that CSC was actually worth much more than its then current share price to enable a bid to be tabled which stood a chance of gaining shareholder support. We also suspect that any trade purchaser would have been aware of the singular lack of success of previous ‘mega deals’ in the sector. Anyway, many of the obvious trade candidates to purchase CSC are not in the finest state themselves to go embarking on a venture of this magnitude and risk.”

The end of CSC’s exploration process was followed quickly by speculation that Misys could be acquired by business continuity giant SunGard.

A story in The Sunday Times suggested that SunGard had already registered its interest in buying Misys. That interest could derail a management buyout effort by senior executives that was announced on 9 June.

Misys declined to comment. However, more information could be forthcoming on 27 July when the company is due to announce preliminary results.