The board also recommended that Computer Sciences stockholders not tender any of their shares to the bidding company, adding that the takeover offer is inadequate.
Computer Sciences has recommended to its shareholders that they should reject the offer. In a filing with the Securities and Exchange Commission, the company said the offer is "not in the best interests of the company and its shareholders."
Management and the board intend to explore and consider all alternatives available to the company that could provide greater stockholder value, the filing said.
CSC expects "to engage in discussions, and may engage in negotiations, with other parties" to work towards an acquisition of the company by another corporation, a merger, a divestiture of one or more business units, or one or more partnerships, joint ventures or other strategic relationships. Another option is to keep the company in its present form.
Meanwhile, Computer Associates shareholders today filed a lawsuit against the company, alleging that its executives deceived Wall Street by saying it was not planning any significant business acquisitions. The investors further noted that once the deal to acquire CSC was announced, CA's stock dropped nearly 20 percent.
Bernstein Litowitz Berger & Grossmann is representing the shareholders, and the class period applies to investors who held shares between January 27 and February 11.
The lawsuit and CSC's rejection of its offer is not holding CA back, and CA said it is proceeding with its $108 per share, all-cash offer to acquire Computer Sciences.
"CSC's principal justification for rejecting the offer appears to be our willingness to pay more in a promptly negotiated transaction," said Charles Wang, CA's chairman and CEO, in a prepared statement. "Under these circumstances, we are bewildered by the intransigence of CSC's management in refusing to meet with us and the lengths to which its board of directors has gone to frustrate the rights of CSC shareholders."
CA charges that the CSC board met and restructured company bylaws to eliminate shareholders' rights to consider CA's tender offer. "These amendments to CSC's bylaws are void under the bylaws, Nevada law, and prior [court] decisions," said CA in a SEC filing.
Computer Associates hopes that a Nevada Federal District Court hearing scheduled for March 16 will remove the obstacles the CSC board has erected and confirm shareholders' rights to have a say in accepting the takeover offer.
CSC said it firmly believes that Computer Associates' offer does not represent the fair value of the company. In the coming days, it will provide investors with "specific information to substantiate our conviction that Computer Associates' bid falls short of rewarding our stockholders for the underlying value of Computer Sciences."
On December 18, CA executives went to CSC's corporate headquarters in El Segundo, California, and offered the company $100 per share.
"[The executives] first attempted to buy the loyalty of [CSC's] senior executives in the hopes of acquiring CSC for $100 a share. They then threatened to damage CSC and its relationships with its employees and customers if CSC did not sell at a disadvantageous and unfair price and in a transaction that would be detrimental to the interests of CSC and its customers, employees, and stockholders," stated the SEC filing.
A second brief meeting was held February 5, and "CA threatened to directly and wrongfully harm CSC if it refused to agree to a transaction on CA's terms," added the filing. During this meeting, Computer Associates mentioned a lowered offering price of $98 a share.
After those two offers, CA upped its bid to $108 a share in making its offer public February 11.