[LOGO]
February 22, 2000
Dear Stockholders:
On behalf of the Board of Directors of Sterling Software, Inc. ("Sterling
Software"), I am pleased to inform you that on February 14, 2000, Sterling
Software entered into an Agreement and Plan of Merger (the "Merger Agreement")
providing for the acquisition of Sterling Software by Computer Associates
International, Inc. ("Computer Associates").
As required by the Merger Agreement, Computer Associates, through a
wholly-owned subsidiary, has commenced an offer (the "Offer") to exchange 0.5634
shares (the "Exchange Ratio") of common stock, par value $.10 per share, of
Computer Associates (the "Computer Associates Common Stock"), for each
outstanding share of common stock, par value $.10 per share, together with the
associated preferred stock purchase rights, of Sterling Software (the "Shares"),
subject to adjustment as set forth below. If the average trading price of
Computer Associates Common Stock for the designated period prior to the closing
of the Offer (i) is greater than $77.12, the Exchange Ratio will be reduced so
that each Share tendered in the Offer will be exchanged for such number of
shares of Computer Associates Common Stock as is designed to equal $43.45 at the
time the Exchange Ratio is set based on the average trading price of Computer
Associates' shares, or (ii) is less than $63.10, unless Computer Associates
makes the Cash Election (as described below), the Exchange Ratio will be
increased so that each Share tendered in the Offer will be exchanged for such
number of shares of Computer Associates Common Stock as is designed to equal
$35.55 at the time the Exchange Ratio is set based on the average trading price
of Computer Associates' shares. If the average trading price of Computer
Associates Common Stock is less than $63.10, Computer Associates may elect (the
"Cash Option") to reduce the Exchange Ratio that would otherwise be in effect
and pay cash in substitution for Computer Associates' shares for all or a
portion of the shortfall of Computer Associates' share price below $63.10 (the
"Cash Option Amount"). Consummation of the Offer is subject to, among other
things, at least a majority of the Shares, determined on a fully diluted basis,
being validly tendered and not withdrawn prior to the expiration of the Offer.
Pursuant to the Merger Agreement, following the completion of the Offer and
the satisfaction or waiver of certain other conditions, the subsidiary of
Computer Associates will be merged with and into Sterling Software (the
"Merger"), with Sterling Software being the surviving corporation. In the
Merger, each outstanding Share (other than Shares held by Computer Associates
and stockholders who perfect appraisal rights under Delaware law, which will be
available if Computer Associates elects the Cash Option or if the Merger is
completed pursuant to Section 253 of the Delaware General Corporation Law) will
be converted into the right to receive such number of fully paid and
nonassessable shares of Computer Associates as is equal to the Exchange Ratio
finally established for the Offer and, if Computer Associates has elected the
Cash Option in connection with the Offer, an amount in cash equal to the Cash
Option Amount.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, HAS
UNANIMOUSLY DETERMINED THAT THE TRANSACTIONS CONTEMPLATED BY THE MERGER
AGREEMENT, INCLUDING THE OFFER AND THE MERGER, ARE ADVISABLE, FAIR TO AND IN THE
BEST INTEREST OF STERLING SOFTWARE'S STOCKHOLDERS, AND UNANIMOUSLY
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RECOMMENDS THAT STERLING SOFTWARE'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors as described in the enclosed
Solicitation/Recommendation Statement on Schedule 14D-9, including the fairness
opinion of Xxxxxxx, Xxxxx & Co., a financial advisor to Sterling Software, that,
subject to the assumptions, factors and limitations set forth in the opinion,
the consideration to be received by Sterling Software's stockholders pursuant to
the Merger Agreement is fair from a financial point of view to Sterling
Software's stockholders.
Accompanying this letter and Schedule 14D-9 are (i) an Information
Statement, which is attached as Schedule I to the Schedule 14D-9, (ii) the
fairness opinion of Xxxxxxx, Xxxxx & Co., which is attached as Schedule III to
the Schedule 14D-9, and (iii) Computer Associates' Exchange Offer, dated
February 22, 2000, together with related materials, including the Letter of
Transmittal to be used for tendering Shares. These documents set forth the terms
and conditions of the Offer and describe the reasons for the recommendation of
the Board of Directors and certain other factors that stockholders should
consider. We urge you to read the enclosed materials carefully.
If you need assistance with the tendering of your Shares, please contact the
information agent for the Offer, MacKenzie Partners, Inc., at its address or
telephone number appearing on the back cover of the Exchange Offer.
On behalf of the Board of Directors and management of Sterling Software, we
thank you for your support.
Very truly yours,
/s/ Xxx Xxxx
Xxx Xxxx
CHAIRMAN OF THE
BOARD OF DIRECTORS
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