Computer Associates International Inc. moved on Thursday to take full control of a venture it has been operating jointly with Newtrend Group, an Orlando-based bank systems company.
Seeking to put an end to a stormy and litigious three-year relationship, Computer Associates said it would exercise its right to increase its ownership in the venture, Newtrend LP, to 100% from 50%.
Newtrend Group, which owns the other 50%, reportedly had found a potential buyer for the joint venture.
Computer Associates, which bills itself as the world's leading software vendor, said it was exercising a right of first refusal to buy out Newtrend Group at the price offered by the outside party. That price was not disclosed.
More than 500 Customers
The partnership has more than 500 financial institution customers, and Computer Associates' control of the business would represent a significant shakeup in the world of banking software.
Newtrend Group, meanwhile, could emerge a very different company, because many of its software resources are tied up in Newtrend L.P.
Except for a press release issued from Computer Associates' headquarters in Islandia, N.Y., there was no further explanation on Thursday. Computer Associates officials declined to elaborate. Newtrend Group executives did not respond to several telephoned requests for comment, though they were expected to issue a statement late in the day.
Consummation of the deal would put an end to a tug-of-war between Computer Associates and Newtrend Group dating back to the formation of Newtrend L.P. in May 1991.
Given the partners' proclivity to take their differences to court, the story may not yet be over.
Computer Associates' statement said Newtrend was notified its plan and "we hope to complete the paperwork as soon as possible." A spokesman for the software giant wrote that the buyout is "the best possible outcome for Newtrend's clients and employees."
The partnership got off to an amicable start. The association with Newtrend gave Computer Associates and its Infopoint software line ready access to the financial industry.
Newtrend Group, in turn, was able to build its market share among the commercial banks that used Infopoint systems, which run on International Business Machines Corp. mainframes.
Before the partnership, Newtrend mainly served thrifts through its Miser software product, which ran on Unisys Corp. computers.
The relationship quickly soured, and the animosity was aired publicly in August 1993 when Computer Associates sued to dissolve the partnership and regain control of its Infopoint products.
Although the two companies were equally represented in the leadership of their joint Company, Computer Associates claimed it was being left out of key management decisions, and both sides were deadlocked on several issues.
Matters worsened in March 1994, when Computer Associates filed a second suit, accusing Newtrend of misrepresentation and fraud.
This suit claimed that Newtrend executives approved important transactions - including acquisitions - without proper approval, ignored Computer Associates' business strategy, and generally kept executives in the dark about the company's operations.
"Virtually all of Newtrend's Infopoint clients use other CA solutions," Computer Associates said Thursday. "With 100% control of Newtrend, we're now in a position to make sensible long-term decisions and offer banking software clients the product synergy and integration they deserve."