Cerberus ends bid for Affiliated Computer

NEW YORK (Reuters) - Private equity firm Cerberus Capital Management has withdrawn its $6.1 billion takeover offer for Affiliated Computer Services (ACS.N), citing poor debt market conditions, according to a regulatory filing on Wednesday.

Cerberus said in a letter to the special committee of the Affiliated board involved with the offer that it might consider another deal for the company if market conditions changed.

The buyout group, which included Affiliated Computer Chairman Darwin Deason, cited poor debt market conditions among the reasons for pulling the bid.

Investors had expected the withdrawal for months, as the deal was announced a few months before the credit crunch paralyzed the private equity industry. In addition, the board of Affiliated tried to open up an auction for the company, an effort that was undercut by the credit crunch.

Reuters and the Wall Street Journal reported the withdrawn offer late on Tuesday. Affiliated released the letter from Cerberus in a filing on Wednesday.

The company, which provides business process outsourcing and information technology products, has seen its shares steadily drop since the Cerberus-Deason group first made its offer in March, raising it a month later to $62 per share.

Affiliated's shares have traded in the $50 range since August, reflecting the market's doubts that the offer would come together. The stock was down $1.00 to $49.85 per share on Wednesday afternoon.

"We regret that we must withdraw our offer to acquire the Company due to the continuation of poor conditions in the debt financing markets," said the letter, dated October 30 and signed Cerberus Capital Management LP.

"Had the Special Committee engaged with Cerberus and Mr. Darwin Deason on the schedule we proposed in our offer letter, we are confident that our acquisition of the Company would have been approved and closed," the letter said.

Management-led buyout offers often come under heavy scrutiny from special committees and shareholders because they involve insiders trying to buy the company. Affiliated tried to extend the auction of the company to get a higher, competing bid, which never came.

(Reporting by Michael Flaherty, editing by Gerald E. McCormick)