Unisys to Oppose Stockholder Proposal to Separate Information Services from Computer Business
BLUE BELL, PA, FEBRUARY 27, 1997 -- Unisys Corporation said today, in response to a stockholder proposal made public by Greenway Partners, L.P., that it would oppose the Greenway recommendation to the Board of Directors to separate the Unisys Information Services Group and Global Customer Services Group services businesses from the company's traditional computer hardware and software group through either a sale of the hardware/software business or a spin-off transaction.
Unisys said the separation of the Computer Systems Group from the two services groups would jeopardize customer relationships dependent upon the combined capabilities of the three business units. The company's "three businesses/one company" structure allows it to meet this growing need in the marketplace for a source of "one-stop shopping" for information management solutions. Separating the computer business from the services units would eliminate this market differentiator at a time when more than 70% of company revenue is attributable to customers doing business with all three units. Separation would also destroy the synergy among the units, risking lower sales for all three.
In April 1996, a similar Greenway proposal to authorize a spin-off transaction whereby shareholders would become owners of three separate, publicly-traded companies involving the same three groups was defeated by more than a two-thirds majority at the Unisys annual meeting.
Unisys Board of Directors said a year ago in response to the first Greenway proposal that it believed that the company strategy to be a full service information management company would better serve to maximize stockholder value over time. It said it believed a new three businesses/one company structure in place as of January 1, 1996 would improve financial performance and in time maximize shareholder value.
While Unisys has not yet mailed its proxy statement, the company said on February 19 at its annual financial analyst meeting in New York that its full-service information management strategy remains fully in place and represents the optimal match of company capabilities and market opportunity.
The company told the analysts that the three businesses/one company structure was working and that progress was made in all three business units. Financial progress included generating net income in the second quarter of 1996. Net income increased over the previous quarter in each successive quarter and the company reported positive earnings per share after preferred dividends in the fourth quarter of 1996. In the fourth quarter, the operating profit margin of 8.1 percent was the highest in three years. The company said that its goal in 1997 was for both year over year net income improvement quarter by quarter and full year profitability.
Overall, the company said dismantling the three business/one company structure would be very disruptive at a time when the company is making clear financial progress. Unisys said it continues to believe the current structure is the best means to maximize shareholder value over time.
RELEASE NO.: 0297/6171
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