The continuing saga of Mynd's quest to find a buyer appears to have finally reached a conclusion, now that IT services giant CSC Corp. has offered to purchase the insurance software and services company for approximately $568 million.Although the acquisition was not finalized as of mid-July, El Segundo, Calif.-based CSC has tendered an offer of $16 per share to Mynd shareholders. Mynd's board has approved the agreement.
Barring any last-minute glitches, it appeared that Mynd, formerly known as Policy Management Systems Corp., would be absorbed into CSC and cease operating as a separate entity after the deal is concluded.
Cost reductions
CSC executives say the acquisition of Columbia, S.C.-based Mynd would reduce costs and expenses by eliminating some overlapping functions and by consolidating computing and operating facilities at the two companies. CSC executives also hope to pare expenses through workplace reductions.
"There are a number of opportunities for cost-savings relating to people and facilities," says Jackie Van Erp, vice president of global marketing for the financial services group of CSC. "As we get closer to the closing, we'll put together more specific plans."
However, Van Erp did note that as a result of the acquisition, Mynd would be absorbed into CSC. "The effect is that Mynd will become part of CSC rather than marketing products and services as a separate entity," she adds.
If CSC receives 90% of Mynd's shares within 20 business days from the date of CSC's tender offer, a shareholder vote on the acquisition will not be required. Less than 90% will require approval from shareholders, Van Erp adds.
Mynd's acquisition by CSC generally has received favorable comments from industry analysts who believe it could help both companies.
"CSC has deep pockets, global reach and has been a competitor of Policy Management Systems Corp. for years," says Bill Bradway, research director of Newton, Mass.-based technology and consulting firm Meridien Research Inc. "The acquisition is a logical one."
Also, CSC and Mynd have similar lines of business that should make it easier to merge product development and sales and marketing operations, Bradway adds.
The deal also should expand CSC's presence in the insurance industry. "CSC has a lot of outsourcing horsepower but not a comprehensive suite of products in the insurance industry," says Stephen Shook, an analyst with Wachovia Securities Co., Charlotte, N.C.
Litigation woes
CSC and Mynd recently have been mired in litigation with each other. Last January, CSC sued Policy Management contending that Policy Management developed and marketed claims administration software based on confidential information and trade secrets belonging to CSC.
A week later, Policy Management fired back with a lawsuit against CSC charging that CSC had defamed Policy Management and engaged in unfair trade practices (see February issue, page 8).
CSC's offer is the third in a series of attempts over several months to acquire Mynd. Previously, Electronic Data Systems Corp., Plano, Texas, offered to purchase Mynd for approximately $708 million, but withdrew its offer.
Earlier this year, Mynd signed an agreement in which New York-based investment firm Welsh, Carson, Anderson & Stowe would acquire up to 93% of the company for approximately $604 million (see June issue, page 6).
As of December 31, 1999, Policy Management Systems had revenues of $644 million. Once the merger is completed, CSC will have global revenues of more than $2.7 billion in the financial services information technology industry.
A spokesman for Mynd declined comment on the CSC acquisition.
