SunGard Data Systems is defending its proposed purchase of troubled
rival Comdisco's Availability Services business in the face of a US
Department of Justice suit challenging the acquisition on antitrust
grounds.
In a statement, SunGard chairman and chief executive officer, James
Mann, dismissed the DoJ complaint as baseless. "We believe that the
government case is without merit, and we looking forward to proving
that in court," he said.
SunGuard recently said it would buy Comdisco's business-continuity
and disaster recovery services operation for $825m (£579m).
The purchase was approved by Comdisco and supported by a committee
of the company's creditors at an auction on 11 October as part of
court-ordered bankruptcy proceedings against Comdisco.
Comdisco, a provider of business-continuity and disaster recovery
services, filed for bankruptcy protection earlier this year in the
wake of mounting losses.
In a sealed complaint, the DoJ yesterday sought to block SunGard's
acquisition of Comdisco on antitrust grounds.
With annual revenue of $1bn (£700m) and more than 20,000 clients,
SunGard is one of the largest business-continuity and disaster
recovery companies. Together with IBM and Comdisco, SunGard
accounts for more than 80% of the market for disaster recovery
services.
SunGard's proposed acquisition of Comdisco would place the company
firmly in second place behind market leader IBM, said Tony Adams,
an analyst at Gartner. But it is unlikely that SunGard would be
able to use its enhanced market position to unfair advantage, Adams
added. Despite the dominance of the major vendors, the disaster
recovery market still has fairly robust competition and several
options for customers, he said.
"This transaction is pro-competitive, since it will assure that
there is a strong independent business continuity vendor to compete
against the hardware giants, with enhanced services and reduced
costs," Mann said.
In talks with the DoJ, SunGard agreed to hold off on closing the
deal until 15 November, a SunGard spokeswoman said. The DoJ in
return has indicated that it is willing to proceed quickly with the
case and will push to get a ruling on the matter by that date, she
added.
The DoJ dispute is the latest wrinkle in an ongoing tussle
involving Comdisco.
Hewlett-Packard, another vendor with aspirations in this market,
had earlier said it would buy Comdisco. On 16 July, the companies
jointly announced that HP had agreed to acquire Comdisco's
technology unit for $610m (£427m) in cash. Under a court-approved
plan, an auction was held 11 October to see if there were any bids
that improved on HP's. It was at that auction that SunGard trumped
HP's deal with its own $825m (£578m) offer, which was accepted by
Comdisco.