Comdisco has formally accepted Hewlett-Packard's $US750 million offer to buy its disaster-recovery services business, leaving a rival $825 million bid from SunGard Data Systems in the dark.
But not everyone thinks HP's offer is a good one.
"We think the value of this business is $1 billion, no matter how you slice it up," said Christopher Field, a founder of the Chicago-based distressed capital management firm Water Tower Capital and a financial advisor to Comdisco's equity committee. He called HP's bid a "fire sale price" and that it came in after the close of the bankruptcy auction for the Comdisco division, making it invalid.
"SunGard would be getting a favourable price at $850 million . . . we will vigorously oppose the deal at this price," he said.
HP's $750 million offer earned the immediate approval of Comdisco's creditors, but not the approval of its equity committee. The equity committee doesn't want to leave money on the table, Field said. Although HP may be entitled to a deal cancellation charge of $25 million, there would still be an extra $50 million with a SunGard sale.
Comdisco, in the middle of bankruptcy reorganisation, is also in the middle of a battle between HP, SunGard and the US Department of Justice (DoJ) over its disaster-recovery business. HP and SunGard each have fought to acquire it, but the DoJ stepped in to oppose the SunGard bid on antitrust grounds. The US Bankruptcy Court for the Northern District of Illinois postponed ruling on the proposed sale of Comdisco's Availability Solutions business after the DoJ filed a civil suit to block a SunGard win.
SunGard, Comdisco and IBM have a combined 80 per cent of the disaster-recovery market, according to market research from Dataquest.
The $75 million difference between HP's and SunGard's offers is the premium paid for taking the risk of fighting the DoJ antitrust suit, Field said. Comdisco's creditors see the DoJ suit as a new risk factor and want the more immediate payoff.
The sale is subject to approval by the bankruptcy court, at a hearing scheduled for November 7. Last week SunGard said it intended to fight the DoJ antitrust opposition, though a hearing about the matter was scheduled for November 15, after the bankruptcy court session. A SunGard spokeswoman on Wednesday had no comment regarding the signing of the agreement between Comdisco and HP, nor on the court date schedule. The DoJ was not immediately available for comment.
"Whatever happens is going to be litigated by either side," Field said. "I can't believe the estate can't wait a week to see if it can get an extra $50 million."