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Feeling Heat? Buy!
As we anticipated in a prior news blurb, embattled Computer Horizons has found a way to dump excess cash in order to evade the unwelcome attentions of a hostile bidder -- buy someone! Today the company announced its acquisiton for $31 million of RGII, a staffer of outsourced government IT services.
While this sort of transaction under heat is rather common, we don't think it typically results in enhanced shareholder value (except perhaps for the seller). That's because the buyer is under pressure to move quickly, and is motivated less by real arguments of synegistic value than by the prospect of preserving management jobs.
As hostile IT activity increases, expect more such ancillary defensive transactions, a component of the classic "scorched earth" response by entrenched target management.
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