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Going on the offensive to defend its merger with Analysts International Corp., Computer Horizons Corp. on Friday launched a blistering attack on three dissident shareholders seeking to block the deal. In a letter to investors, the Mountain Lakes, N.J.-based information technology services provider said the trio — Eric Rosenfeld, Richard Scott and Stephen Braun — are challenging the $88 million deal in pursuit of short-term gains. The company also sought to discredit the shareholders by characterizing them as either tainted by scandal or as having displayed poor judgment in previous business dealings. The dissident group, which collectively owns a 10.3 percent stake in Computer Horizons and which began a proxy fight against the company in July, has urged shareholders to vote against the deal, which the group said is overpriced and misguided. Shareholders will vote on the company’s board on Sept. 2. Computer Horizons on April 13 said it would acquire Analysts International in a deal under which it will offer 1.5 shares for each share of the target. Both Computer Horizons and Minneapolis-based Analysts International provide IT advisory and outsourcing services. Combined, the companies would have annual revenues of about $600 million. The effort to halt the deal is being led by Rosenfeld, a veteran shareholder activist who heads Crescendo Partners LP, a New York investment firm that owns more than two-thirds of the dissident group’s holdings in Computer Horizons. The remainder is held in trusts run by former Columbia/HCA Healthcare Corp. CEO Richard Scott and by Stephen Braun, who worked as Columbia’s chief legal counsel until the late 1990s. In its letter, Computer Horizons questioned the trustworthiness of the three investors, pointing to a massive corporate fraud scandal at Columbia/HCA that preceded Scott and Braun’s departure from the hospital chain. Scott was fired in 1997, and Braun departed shortly thereafter after the government began investigating Columbia/HCA’s business practices. The company eventually paid fines totaling $1.7 billion. Computer Horizons also linked Rosenfeld’s investment in Hip Interactive Corp. to the electronic entertainment provider’s move to file for bankruptcy protection in July. Yet the investment is possibly the one blemish in a series of investments Rosenfeld has made in technology companies in Canada, where he is well known for leading a shareholder uprising at Ontario’s SPAR Aerospace Ltd., since purchased by L-3 Communications Holdings Inc. But least one investor outside the dissident group backed the shareholders’ move to block the acquisition of Analysts International. “In 20 years of investing in IT companies, this is the single worst deal I’ve ever seen,” said the investor, who did not want to be identified. “They’ve decided they need to have scale and to get bigger, which at one level may be true,” he said. Yet the expansion plan involves increasing the company’s reliance on its less profitable staffing unit at the expense of its higher-margin business software unit, said the investor, who plans to vote against the merger. Copyright �2005 TDD, LLC. All rights reserved.

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