Private equity firm Cerberus has terminated its acquisition offer to acquire Affiliated Computer Services Inc. (NYSE:ACS).  This was a $6.2 Billion deal that valued Affiliated at $62 per share.

Cerberus did not blame the company for "material business changes" here like the weasel efforts of some competitor deals that have been called off.  According to the WSJ, the reason here is because of continuing poor conditions in the credit markets.  In other words, "we can’t finance the debt portion of the buyout."  Cerberus’ offer was made in March as a partial management-led buyout with founder Darwin Deason whom already owned some 42% of the company.

But the group does blame the special committee for taking to long in its search for a potential higher offer, because the group is reported to have said that it is confident the deal would have closed had the schedule proposed been adhered to.

The truth is that shares were trading under $51 yesterday, so this was already on the ropes.  The WSJ is also reporting that the two largest shareholders are unhappy about the board’s actions (or inaction), and the word from Pzena Investment Management according to the WSJ was "I don’t know why the board didn’t respond to us. They were radio silent."

Affiliated Computer is indicated lower, although it is still too early to tell the exact indications.  If you are a board member at Affiliated Computer that was in that special committee, it’s probably a good time to start finding out how much personal insurance you have protecting you from shareholder lawsuits.

Acxiom faced a similar drop.

Carl Icahn is going after BEA Systems over the board being childish.

Cablevision’s deal from the Dolan’s being called off was more the fault of holders.

Jon C. Ogg
October 31, 2007

Jon Ogg can be reached at [email protected]; he produces the Special Situation Investing Newsletter and does not own securities in the companies he covers.

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