CA Buys Platinum

Computer Associates Int’l Inc. (CA) fed its notorious appetite for acquisitions with the recent purchase of rival Platinum Technology International Inc. (www.platinum.com) for $3.5 billion.

Two other companies had recently inquired about purchasing Platinum, according to Platinum's CEO Andrew Filipowski, including one with which he held formal negotiations. Filipowski wouldn’t identify the companies.

Dan Kusnetzky, an analyst with International Data Corp. (IDC, www.idc.com) says this purchase is consistent with CA’s strategy of buying companies.

Platinum’s strategy has been similar, but analysts speculate that financial problems resulted from its trouble integrating the products of acquired companies with Platinum’s own.

"Here we have two companies that have spent a lot of investment resources gobbling up other companies, and now they have turned to each other for gobbling," Kusnetzky says.

This is the first big acquisition by CA of a software company since it bought Cheyenne Software Inc. (www.cheyenne.com) in 1996. Between these two giant buys, CA acquired mostly software services companies.

Both CA and Platinum make a variety of software programs designed to create and manage large databases and track and monitor internal computer usage. Platinum also makes Web-development software and programs that help companies write their own specialized software.

In addition to the extensive product line Platinum brings to CA, the company will be used to beef up CA’s services offerings. More than 1,000 Platinum services employees will be added to the services sector of CA.

Although the two companies previously competed, specifically in the systems management area, both CA president Sanjay Kumar and Platinum's Filipowski state that there is little clashing between the products, save the systems management software that both companies sell.

"Platinum is in five or six distinct businesses, and there is overlap in only one of those," CA’s Kumar says. "Systems management is one area where we can really work together."

The officials stated that customers of both companies won’t be neglected. "Where there is overlap, we will provide support for both products," Platinum’s Filipowski says.

CA plans to combine its Jasmine object database with Platinum’s database tools, data warehousing and Internet technologies to build an enterprise-level knowledge portal.

"Knowledge portals and Internet management are two areas in which we both are strong," Kumar says. "We will focus on enterprise customers and what the Internet can do for our enterprise customers."

Kumar says that as a result of the merger the companies also will design, develop, manage and warehouse applications. By integrating Platinum into its own infrastructure, CA will be better equipped to scope applications, deploy projects, monitor project development and ultimately deploy and service the products created.

The companies are expected to develop a plan in the coming weeks to integrate the company's products.

"In the acquisition of other companies, both CA and Platinum have been trying to create unified product lines," IDC’s Kusnetzky says. "In terms of this deal, Platinum has a number of really good tools, and since CA has been successful at creating a unified product line in the past, they should be able to do it again."

Although he wouldn’t commit to a specific date, CA’s Kumar says CA and Platinum management teams hope to close the deal within a couple of months.