In their first face-to-face conversation since IBM began its hostile takeover bid for Lotus Development Corp., the heads of the two companies met yesterday in New York City, according to an executive familiar with the meeting.
While the meeting was described as merely exploratory on the part of Lotus' chairman and chief executive, Jim P. Manzi, it is expected to continue today and is the first indication that Lotus is at least willing to hear IBM's case for acquiring the software company through a $60-a-share tender offer.
Neither IBM nor Lotus would comment late yesterday.
IBM announced its hostile-takeover plan Monday morning. Mr. Manzi, who was said by friends to be emotionally devastated by the prospect of losing control of Lotus, called IBM's chairman, Louis V. Gerstner Jr., at midday Tuesday, requesting the meeting.
The overture, according to an executive close to Lotus, came after Mr. Manzi and his advisers received several expressions of interest from other would-be acquirers or strategic partners. Some calls were said to come from Japanese companies.
Before hearing out those potential suitors, Mr. Manzi apparently wanted to get a clearer understanding of the implications of IBM's offer and how the companies would mesh. He and other executives of Lotus, which is based in Cambridge, Mass., are said to be particularly concerned about keeping the company's team of software writers intact.
While Mr. Manzi is expected to report back to Lotus' board before reaching any decisions, any indication of a quick completion of an IBM deal could only cheer Lotus shareholders. While management agonizes, institutional shareholders, which own more than 80 percent of Lotus' stock, have been sitting back -- and are already sitting pretty.
Lotus' shares, which last week were worth less than $30 each, climbed again yesterday -- closing at $62.375, up 56.25 cents -- a sign that investors believe Monday's $60-a-share bid by IBM will not be its final offer. And while the big shareholders, including Fidelity Investments, may eventually be called upon to force Lotus' response, for the next week or so they need do nothing but marvel at their windfall.