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Sale of Comdisco unit to SunGard approved

Sale of Comdisco unit to SunGard approved

A US bankruptcy court judge has approved the sale of Comdisco's Availability Solutions business to SunGard Data Systems for $US825 million, according to the two companies.

Comdisco spokeswoman Mary Moster said the judge turned down a $750 million bid from Hewlett-Packard because HP didn't comply with the court-approved bidding procedures. HP's bid came in after the court-approved auction for the business unit had closed. HP couldn't be reached for comment before the deadline for this report.

"This acquisition will ensure that the critical business continuity industry will be served by an experienced, independent vendor providing hardware-neutral services," said James Mann, SunGard's chairman and CEO, in a statement. "Customers will benefit from more facilities, platforms, network capacity and technical personnel, with increased operating efficiencies." SunGard also couldn't be reached for further comment at deadline.

The deal, however, is still subject to a favourable ruling in the antitrust lawsuit filed by the US Department of Justice. A decision is expected on Thursday.

The bidding war was set in motion on July 16 when Comdisco filed for bankruptcy and agreed to sell the business unit to HP for $610 million, subject to higher or otherwise better offers in a court-authorised auction process. After the October 11 auction, Comdisco selected SunGard's $825 million bid as the highest and otherwise best offer.

The DoJ then filed the civil lawsuit against Pennsylvania-based SunGard and Illinois-based Comdisco to block the sale of Comdisco's Availability Solutions Unit to SunGard. The DoJ claimed the sale would result in higher prices and lower-quality services for users because Comdisco and SunGard are two of the three major vendors of disaster-recovery services.

On October 31, however, Comdisco said it was selling the disaster-recovery business unit to HP for $750 million and that the sale had been approved by Comdisco's board of directors and a committee of creditors.

In response, SunGard filed a motion in bankruptcy court, challenging Comdisco's decision because HP's bid didn't comply with the court's bidding procedure. A committee of Comdisco's shareholders had supported the sale of the disaster-recovery unit to SunGard.

"We are very pleased that the court today approved our motion filed at the commencement of our Chapter 11 reorganisation cases to sell our Availability Solutions business," said Norm Blake, chairman and CEO of Comdisco, in a statement.

"We have been working closely with SunGard since the [northern] summer to successfully resolve the antitrust situation, and we expect to continue to work closely with them to ensure a seamless transition for our customers and employees.

"We are also pleased that the court today clearly found that our Availability Solutions sale is in the best interests of our stakeholders and that our company exercised all appropriate business judgment in reaching this outcome."


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