In a proposal letter sent to Policy Management's board of directors on Friday, EDS said it can offer the company's shareholders "a more compelling proposal."
EDS has offered to buy 100 percent of the firm's common stock for $18 to $20 a share in cash, which is a premium of approximately 30 to 40 percent over the current bid and approximately 50 to 67 percent over Policy Management's current trading price. Based on roughly 35.4 million shares outstanding in December, the cash deal would be worth as much as $708 million, according to Reuters. In the letter, EDS asked Policy Management for a response by the end of tomorrow's business day.
After the market closed Friday, shares of Policy Management climbed $1.13, or about 9 percent, to reach $13.13.
In late March, Columbia, S.C.-based Policy Management, which is aggressively making the shift to focus on e-commerce financial services, signed a merger agreement with New York-based Welsh, Carson. The deal lets stockholders elect to either retain their shares or receive $14 per share in cash.
EDS, which has been revamping its strategy to focus on more Internet-related projects, said the Policy Management buy will help it capture more business in the financial services and insurance industries.
"EDS has a keen interest in the insurance market and sees tremendous potential in leveraging our existing IT (information technology) and outsourcing skills in this industry," EDS chief executive Richard Brown said in the proposal letter.
Policy Management's board advised the company to consider EDS' proposal.