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CA sues Wyly
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June 29, 2001: 3:43 p.m. ET
Computer Associates sues investor for violating non-compete pact
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NEW YORK (CNNfn) - Three days after billionaire investor Sam Wyly announced plans to boost shares of Computer Associates by 50 percent if management was ousted, it was revealed the company has sued him to prevent a revamp of its board of directors.
Computer Associates (CA: up $2.54 to $36.00, Research, Estimates) filed a lawsuit on Monday in U.S. District Court for the Eastern District of New York, charging Wyly with violating a non-compete pact he had agreed to when he sold his company Sterling Software to Computer Associates (CA) for $4 billion in stock in March, 2000.
The complaint alleged Wyly disseminated "false and misleading public statements" which "constitute a breach of a written agreement signed in connection with the sale of Wyly's former company" in which he "covenanted not to participate in the software business for five years."
"While we look forward to making our case directly to our shareholders, we cannot ignore Mr. Wyly's false and misleading statements and we intend to hold him legally accountable," CA said in a statement. "Furthermore, we believe he has violated a non-compete agreement he signed when he sold Sterling to CA."
"The claim in the lawsuit is bogus, I'm not competing with CA. I'm competing with (CA Chairman Charles) Wang. This lawsuit is a smokescreen. We're not intimidated by it. We're in this fight to the end," Wyly told investors during a conference call Friday afternoon, responding to the complaints contained in the CA suit.
On June 26, Wyly said he plans to boost shares of Computer Associates International by nearly 50 percent to $60 a share within three years, but will hold off buying more stock until he gains control.
He also cited a study to claim customer dissatisfaction with the software firm.
But CA said the study was "fundamentally flawed and self-serving research that encompassed 76 interviews."
Last week, a Dallas-based investor group led by Wyly initiated a proxy solicitation of Computer Associates stockholders in order to take control of the company.
Islandia, N.Y.-based Computer Associates, the world's No. 3 independent software company behind Oracle and Microsoft, sells a broad range of enterprise systems management, storage management, and database software to corporate customers. Along with most technology companies, stock in CA has dropped significantly during the current economic slowdown. 
-- from staff and wire reports
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Computer Associates
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