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In the wake of a Justice Department antitrust lawsuit seeking to block the move and news Wednesday that rival bidder Hewlett-Packard had won the approval of Comdisco's board, SunGard is pressing on.
On Wednesday, HP took the lead in the bidding war for Comdisco's Availability Solutions group, which helps companies plan for and deal with disasters such as earthquakes or attacks such as that of Sept. 11. Comdisco's board and creditors' committee approved HP's $750 million bid and withdrew support for an earlier $825 million bid from SunGard.
But in a response, SunGard reiterated its belief that the lawsuit was without merit, said the parties involved in the suit have agreed to resolve the case by Nov. 15, and said it was willing to increase its current $850 million bid. The bankruptcy court is scheduled to consider HP's bid Nov. 7, HP said Wednesday.
"We will explore all avenues of completing this acquisition, including increasing our bid," SunGard Chief Executive James Mann said in a statement Wednesday.
"The government's assertion that the acquisition will raise prices and lower service quality is absurd," Mann said, adding that a SunGard acquisition would ensure there's a disaster recovery and planning company that can compete with "the hardware giants."
Mann also said that the committee representing Comdisco equity holders still backs SunGard's bid.
HP and IBM already provide some disaster recovery services, but SunGard specializes in them. The services typically involve the provision of backup, PC-equipped office space, as well as servers and storage systems that can be used when primary systems are unavailable.
Comdisco is selling its disaster recovery division--which had $400 million in revenue in the year ended Sept. 30, 2000--as part of a bankruptcy recovery plan.
HP and Comdisco initially had an agreement to transfer the 1,300-person division for $610 million, but on Oct. 15 SunGard announced that an $825 million bid had won the approval of Comdisco's board. HP responded that antitrust concerns dogged SunGard's bid because SunGard was a dominant player in the disaster recovery market.
The Justice Department unsealed a lawsuit Tuesday that had been filed in U.S. District Court in Washington, D.C., that alleges a SunGard acquisition would likely increase the cost and decrease the quality of disaster recovery services.
Earlier, Mann invoked the Sept. 11 attacks in his argument against the Justice Department's suit.
"In light of the recent attacks on America's infrastructure, it is contrary to public policy for the government to oppose a transaction that obviously will strengthen the ability of SunGard and Comdisco to service the nation's disaster recovery needs. Now more than ever, our country needs a vital and capable business continuity industry," he said in a statement.
