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CA buys LDA Systems

Computer Associates continues its push to acquire smaller software companies, buying LDA Systems, a consulting and services firm.

Computer Associates today continued its push to acquire smaller software companies, buying LDA Systems, a consulting and services firm.

The Islandia, New York-based company's deal comes on the heels of a thwarted attempt to buy Computer Sciences earlier this year.

Analysts reacted favorably to the deal. Credit Suisse First Boston raised CA's stock to a buy at a target price of $49.50 per share.

CA, like many companies in the computer services industry, is trying to increase services and consulting sales in this hotly competitive market. Earlier this month, the $4.7 billion company's chief executive, Charles Wang, said he was committed to expanding the company both through acquisitions and internal growth by continuing to buy smaller companies.

In August, CA bought software maker Realogic.

According to the latest deal, announced this morning, Cleveland-based LDA will become part of CA's Global Professional Services (GPS) division, providing services within the vertical market, including manufacturing, transportation, banking, communication, and government. LDA specializes in installations in midsized companies, in areas such as Lotus Notes, Microsoft platforms, data warehouses, and e-commerce.

The deal, though small, helps boost CA's penetration in midrange businesses in the mid-West and Atlanta area, and strengthens their e-commerce strategy, according to Michael Shey, analyst at Alex Brown in New York.

"We're growing our service business as aggressively as we can," Chris Wagner, GPS executive vice president, said during a teleconference held this morning. Wagner said the company plans to continue forging partnerships and growing internally, though he did not comment on any other acquisitions planned by the end of the year.

Financial terms of the deal, reached after a 90-day negotiation, were not disclosed.

All 300 of LDA's employees are expected to join CA. In addition to its headquarters in Cleveland, LDA will maintain facilities in Columbus, Ohio; Cincinnati, and Atlanta. The 20-year-old company, with 1997 revenues of $25 million, has had an annual growth rates of 35 percent over the last three years.

GPS offers IT services in infrastructure management, application development and integration, Y2K compliance services, asset management, and end user productivity. Services range from strategic business development to consulting, implementation, and comprehensive outsourcing.

CA has more than 11,000 people in 160 offices in 43 countries and had revenue of $4.7 billion in fiscal year 1998. On November 18, Wang reported the company is on track to generate $1 billion annually by the close of its fiscal year on March 31.

Bloomberg contributed to this report.