Policy Management, Electronic Data Systems Discuss Merger Further

May 11, 2000

Electronic Data Systems (EDS), the world’s No. 2 computer services provider based in Plano, Texas, and insurance software company Policy Management Systems are continuing talks about a deal worth as much as $700 million.

In April, EDS informally offered to acquire the software company, topping another bid by Welsh, Carson, Anderson & Stowe, a private investment firm. Reuters news service reported today that Policy Management Executive Vice President and General Counsel Steve Morrison said the company had signed a confidentiality agreement allowing due diligence with EDS.

In March, Policy Management agreed to a recapitalization deal with Welsh, Carson totaling $604 million. Under that agreement, Welsh, Carson would acquire 75 to 93 percent of Policy Management. Should the company follow through on a deal with EDS, Policy Management would owe Welsh Carson a fee of $19 million plus as much as $5 million in reimbursement for terminating their agreement in favor of a better offer.

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