Computer Associates to Buy Cheyenne in $1.19-Billion Deal

Computer Associates International Inc. said Monday that it agreed to buy Cheyenne Software Inc. for about $1.19 billion in cash, a move that would expand Computer Associates’ business software line to include data storage and security products.

By adding Cheyenne to a list of at least six acquisitions since 1987, Computer Associates would boost the number of its data-management software products tied to Microsoft Corp.’s increasingly popular Windows NT operating system. Cheyenne also provides security software for the growing electronic commerce industry.

The company’s $30.50-a-share offer, 36% more than Cheyenne’s closing price Friday, sent Cheyenne shares soaring $7.23 to close at $30.08 on the American Stock Exchange. It was the most active stock in U.S. markets.

The acquisition is worth the high price because Cheyenne “fills a niche and provides a market opportunity for Computer Associates,” said Kurt Brunner, a money manager for PNC Institutional Investors, which owns shares of the third-biggest software company.

Islandia, N.Y.-based Computer Associates shares jumped 75 cents to close at $64.50 on the New York Stock Exchange.

The deal won’t dilute earnings or cause growth to slow, Computer Associates said. “We don’t think we’ll have to pay for the acquisition in those terms,” said Chairman and Chief Executive Charles Wang.

The purchase, unanimously approved by the boards of both companies, follows McAfee Associates Inc.’s unsuccessful bid for Cheyenne in the last year. In May, McAfee ended its offer of $27.50 a share, or $1 billion, after Cheyenne’s board refused to discuss the bid, saying the offer was too low.

Roslyn Heights, N.Y.-based Cheyenne would become an independent division of Computer Associates, which makes software that manages companies’ databases and their mainframe computers.