Control Data Corp. has decided against selling Commercial Credit Corp., its Baltimore-based financial services subsidiary.
Marvin G. Rogers, chief financial officer at Control Data, said yesterday that the company decided to stop trying to sell the subsidiary and to start implementing changes at Commercial Credit to cut costs. Control Data, based in Minneapolis, originally decided to sell Commercial Credit so it could focus its efforts on the computer industry, Rogers said.
"We decided that we had better terminate the discussion and go ahead and implement the plans for improving Commercial Credit," he said, adding that the process of reassessing the subsidiary's position in some markets continues.
Commercial Credit already has reduced its work force from 9,000 to about 6,500 over the last 18 months, and the parent company will wind down the Control Data Business Centers, the Commercial Credit branch that offers loans, tax planning, computer help and other services to small businesses, according to Sheila Ruof, Commercial Credit's director of corporate communications. The subsidiary also transferred its ERA real estate branch to Control Data, although Commercial Credit retains management of ERA, she said.
Control Data started its campaign to sell Commercial Credit in November. Originally, the parent company wanted $1 billion for the subsidiary, but that price had dropped to $844 million by Data Control's annual meeting on May 1. The most recent prospective buyer was Security Pacific Corp., a Los Angeles-based firm that is the nation's eighth-biggest bank company, but negotiations were broken off.
"It wasn't a critical thing we felt we had to do," Rogers said of the attempted sale.
"If the price had been there, they would have sold," said Michael Hamilton, an analyst at Piper, Jaffray and Hopwood in Minneapolis.
Control Data bought Commercial Credit in 1968 to provide a source of financing for its computer company, but analysts say it no longer is necessary for a computer company to have a financial services subsidiary. Control Data could use an influx of cash for its business, according to Hamilton, but the company was unwilling to sell its subsidiary for too low a price.
Although a recent lowering of interest rates is favorable to Commercial Credit, Rogers said it was not a factor in deciding to hold onto the subsidiary.
Commercial Credit had assets, primarily loans and leases, of $7.4 billion at the end of 1984 and earnings of $50 million on revenue of $1.3 billion. Control Data earned $32 million on revenue of $5 billion in 1984.