Opoed #2


Hostile Bid for Computer Sciences

After a fruitless one-week wait for a reply to its offer to buy El Segundo-based Computer Sciences Corp., Islandia, N.Y.-based Computer Associates International Inc. last week launched a $9.8 billion hostile takeover bid.

The $108-a-share bid from Computer Associates is identical to the friendly offer it had previously made. The board of Computer Sciences was scheduled to meet late last week to consider a response.

Computer Sciences provides computer consulting services to businesses; as a result, its primary asset is the expertise of its employees. Analysts consider the hostile bid a somewhat risky approach, because employees may bolt if they are unhappy with new management. Computer Associates undertook a preemptive move early on by promising not to lay off Computer Sciences workers.

Bigger Pensions for County Workers

Los Angeles County is among 20 California counties that have agreed to pay millions more in retirement benefits to their workers, following a state Supreme Court ruling in October.

The board of L.A. County’s retirement system agreed in early February to pay additional benefits to its current workers, although not to retirees. The increase is expected to cost the county an additional $4 million a year, but the sheriff’s deputies union has threatened to file suit over the exclusion of retirees.

In October, the state Supreme Court ruled that Ventura County is obligated to pay workers pensions based not only on current salaries, but also on the value of perks and bonuses. Ventura, along with Los Angeles and 18 other counties, had been operating under a 1937 law that excluded perks and bonuses from the calculation of pension benefits.

BAT Under Investigation

Burbank-based BAT International announced last week that it would honor a subpoena for financial documents from the Securities and Exchange Commission, which is investigating a run-up in the company’s stock price.

BAT claims to have made a breakthrough in automotive engine efficiency, saying its “pulse-charge” engine is capable of achieving 100 miles per gallon of fuel. BAT’s stock price escalated from a low of 8 cents a share to a high of $3.25 in six weeks, although it had fallen back to about 50 cents as of last week.

While agreeing to supply financial documents, BAT officials had not yet decided whether to accede to SEC demands for documents on its pulse-charge technology, for which the company is still seeking a patent.

Sagansky Bows Out at Sony

Sony Pictures Entertainment’s co-president abruptly resigned last week, saying it is clear that his authority has been reduced as the company’s Japanese owners take a more hands-on approach to the entertainment unit’s management.

Jeff Sagansky, former president of CBS Entertainment, took the No. 2 job at Culver City-based SPE in October 1996. He released a statement last week that read, “The terms under which I accepted this assignment almost a year and a half ago have changed.”

Sagansky said it became clear that his authority was being compromised after he attended a meeting of top Sony Corp. officials in New York in early February.

Cohr Grows Amid Bad News

Officials with troubled health care firm Cohr Inc. announced two acquisitions last week, even while revealing that Cohr itself is up for sale and the company’s financial results will be worse than expected.

Chatsworth-based Cohr, which runs a hospital equipment maintenance service and a group purchasing plan, announced the results of an external audit showing that past sales were recorded prematurely, and liabilities misstated. As a result, 1997 earnings previously stated as $4.8 million (93 cents a share) were cut in half to $2.4 million (46 cents a share).

Company officials said they have already received several unsolicited acquisition bids, and confirmed that Cohr is indeed on the block. But that didn’t stop them from buying two companies last week, perhaps to shore up Cohr’s value in the eyes of acquirers.

Cohr purchased Blue Ridge Clinical Equipment Services Inc., a company in Lynchburg, Va. that services anesthesia equipment, and the group purchasing division of SharePlus Inc. based in Pleasanton, Calif.

Foundation to Exit Workers’ Comp

Woodland Hills-based Foundation Health Systems Inc. announced last week that it plans to sell its unprofitable workers’ compensation division, and is considering selling its dental and vision care units.

Foundation Health expects to report a loss for the workers’ comp unit for fiscal 1997, after taking a fourth-quarter charge of between $50 million and $75 million to boost reserves.

Selling the unit is considered a good move by analysts, although Foundation may have trouble finding an acquirer for the unprofitable unit.

Valley Leaders Back Airport Plan

The United Chambers of Commerce of the San Fernando Valley, which represents 23 chambers in the region, announced its support last week of a controversial plan to expand Burbank Airport.

The plan to relocate the airport’s terminal and add five new gates to accommodate increases in air traffic is also advocated by Burbank’s neighboring cities of Glendale and Pasadena, but Burbank city officials fear it would increase noise, traffic and pollution.

Despite the support from business leaders, Burbank officials continue to insist on mandatory curfews on flights or other restrictions to protect residents.

L.A. Unified Rejects English-Only Testing

The board of the Los Angeles Unified School District last week voted 6 to 1 in favor of a proposal by Supt. Ruben Zacarias to defy Gov. Pete Wilson’s English-only testing mandate, and the district vowed to take the state to court over the new law.

The district intends to administer a state proficiency test in Spanish to about 90,000 Spanish-speaking students, in violation of a law pushed by Wilson requiring the state’s schools to test only in English. Attorneys plan to challenge the state law, arguing that it violates civil rights laws.

? Compiled by Dan Turner

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