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Cerberus Capital Management on Tuesday made an $8.2bn bid, including debt, to buy Affiliated Computer Services and take it private with the support of Darwin Deason, the company’s founder and chairman.
ACS was already in play last year before losing two top executives amid the stock-options backdating scandal that affected many US companies.
The proposal by Cerberus marks the latest foray by private equity into the technology industry, which buy-out firms traditionally shied away from before clinching a number of large transactions in the current cycle, including last year’s $18bn takeover of Freescale Semiconductors.
It provides further evidence of the dealmaking appetite at Cerberus, which is also considering a take-over of Chrysler, the US automaker owned by its German parent DaimlerChrysler.
Mr Deason, who controls 40 per cent of voting rights at ACS, emerged unscathed from last year’s internal investigation into the company’s stock options practices. This resulted in Mark King, chief executive, and Warren Edwards, chief financial officer, stepping down from their posts.
ACS had considered an offer to buy the company in December 2005 and January 2006 by a consortium including Bain Capital, Blackstone, Silver Lake Partners and Texas Pacific Group but ultimately the negotiations fell apart. ACS then bought back $400m of its shares.
Cerberus and Mr Deason are offering to pay $59.25 per share for ACS and assume about $2bn of the company’s debt. That is significantly lower than the value of last year’s private equity bid for ACS, which was worth between $62 and $65 per share, according to reports.
However, the price represents a premium of 15 per cent compared with ACS’s closing on Monday.
ACS shares had risen 8.7 per cent to $59.95 by the close of trading on Tuesday amid investor expectations that Cerberus and Mr Deason would be forced to raise the offer or of a rival bid.
Mr Deason would continue to be executive chairman after a Cerberus takeover and is working exclusively with Cerberus on the deal.
Mr Deason and Cerberus suggested that they would not be surprised if ACS decided to auction the company in response to their move.
“The investment partners believe that a robust process is in the best interests of ACS, its public shareholders and the transaction, and expect the proposal to undergo a customary market check process following execution by the investment partners of a definitive agreement with ACS,” said the bidders, who are being advised by Citigroup.