Hooking Them Up

In spite of a new corporate symbol and the influx of $450 million raised to modernize the creaky 117-year-old company, Western Union's growth rate has been discouraging. Telegrams, which still account for 46% of the company's revenues, were off last year; some modernization programs were slow getting started and, as a result, revenues rose a meager 5%. But Western Union does have some interesting possibilities. One is that, in spite of assets of $741 million, its total common-stock value is about $350 million--which puts it in the range that an acquisitive-minded smaller company could manage. Moreover, in an age of computers, Western Union's extensive cable and microwave circuits are a logical way to hook computers together. Not surprisingly, Western Union has been the target of two determined takeover attempts, one of which last week verged on success.

The first move came three weeks ago from Texas-based University Computing Co., which attempted to acquire Western Union with a tender offer for a controlling 10% of W.U. stock. The offer sent the stock from $35 a share to $44.88 and prompted other prospective buyers to step up their efforts. Last week Computer Sciences Corp. of El Segundo, Calif., which is about one-sixth as big as Western Union, made a better bid. After marathon negotiations in New York and Washington between Chairman-President Russell W. McFall of Western Union and Founder-Chairman Fletcher Jones of Computer Sciences, the two men agreed to recommend a merger to shareholders. In an exchange of stock worth $350 million, Western Union will become a part of nine-year-old Computer Sciences. Jones pointed out that his company and Western Union had been working with each other for four years developing ways to transmit computer read-outs over telegraph circuits. As a result, he said, they share "an awareness of what a combination of the two companies could achieve."

Jones, now 37, became a young millionaire (TIME cover, Dec. 3, 1965) soon after he left a data-processing job at North American Aviation and founded Computer Sciences with $100 capitalization. The company grew into a bustling enterprise with $53.5 million annual sales, as Jones devised new programs and uses for the computers that other companies were making. One Computer Sciences innovation is Computax, an income tax program that speeds and eases the work for accountants doing corporate or personal tax returns. Another, about to be introduced, is Computicket which will link every kind of entertainment from baseball to ballet to local outlets like supermarkets and enable shoppers not only to pick the seat they want in a matter of seconds but to receive a computerized ticket as well. With only 1% of U.S. computers so far linked to one another v. estimates of 50% within the next decade, Computer Sciences will now be able to use Western Union to broaden the state of the art.

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