EDS Withdraws Acquisition Offer for Policy Management Systems

May 16, 2000

Plano-based Electronic Data Systems Corp. has withdrawn its offer to buy Policy Management Systems Corp. for $700 million. The announcement, which came after EDS examined the insurance software company’s confidential financial statements, opens the door for Policy Management to pursue a previously planned $600 million deal with Welsh, Carson, Anderson & Stowe.

The speed with which EDS aborted the offer has many stockholders and analysts wondering what it saw in the financials. Many are speculating that the Welsh, Carson offer could also encounter rough water.

Policy Management’s first quarter results saw an operating loss of $2.1 million. The company’s deteriorating profits have been attributed in large part to poor results in its bank consulting business.

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