Updated from 11:52 a.m. EDT

Shares of



surged 37% Tuesday after

Computer Sciences


announced that it would acquire the financial-services software maker, formerly

Policy Management Systems

, for $568 million in an all-cash deal.

Computer Sciences, a computer-services company based in El Segundo, Calif., will buy at least two thirds of the 35.5 million outstanding Mynd shares, at $16 a share, followed by a merger at the same price. Mynd will become part of Computer Sciences' global Financial Services Group in Austin, Texas.

The agreement is meant to improve Computer Sciences' efforts to provide systems and services to the global insurance and related financial-services industries.

Mynd's stock climbed 4 1/16 to close at 15 Tuesday afternoon. But shares of Computer Sciences fell 12 1/6, or 14.5%, to close at 71 5/16.

The drop in Computer Sciences' stock was not a response to the acquisition, according to Brian Maimone, an analyst for ING Barings. He said the stock decline could be attributed to the company's "talking about in this point of time revenue that are a couple of percentage points of growth, on a year-over-year basis, below their prior guidance for the current quarter."

The deal comes after

Electronic Data Systems


, a business software and consulting company, in May

pulled out of merger talks with Policy Management Services two weeks after offering $18 to $20 a share for the Blythewood, S.C., financial consulting company. Nancy Voith, a spokeswoman for EDS, would not comment on the Plano, Tex-based business software and consulting company's concerns. The offer by EDS had followed a $14-a-share takeover bid from

Welsh, Carson, Anderson & Stowe

, a private investment firm interested in Policy Management Services.

In a conference call held by executives of Computer Sciences and Mynd, Van B. Honeycutt, chairman, president and chief executive of Computer Sciences, would not comment on EDS's concerns and said, "We concluded what we concluded."

Honeycutt said Computer Sciences would increase its revenue by reducing costs associated with redundant functions, particularly in the workforce, the marketing and sales organizations, research and development, purchasing and duplicate capital expenditures. "There are a lot of synergies here," he said, focusing particularly on personnel, facilities, and products that will either be eliminated or improved. "They're quite significant, and we're quite comfortable." Honeycutt would not provide any numbers for cost savings.

Brian Maimone, an analyst for ING Barings, said Computer Sciences has a much larger insurance platform than EDS has -- and with the integration with Mynd, its insurance platform will be about 4 times the size of EDS'. Maimone said Computer Sciences will have the ability to extract "many more cost synergies ¿ from the combination, relative to EDS."

"They've got points of view about cross-selling and revenue synergies that somebody like EDS wouldn't have, because they have a much smaller client base to begin with," said Maimone, who has a buy rating on Computer Sciences and has done no underwriting for it. He added that there were "clearly holes in the

Mynd solution set, and there are some gaps in the

Computer Sciences solution set."

G. Larry Wilson, chairman, president, and chief executive for Mynd, emphasized in the conference call that the two corporations have complementary strengths in the insurance industry. He said, for example, that Mynd's e-business claims will compliment well Computer Sciences' consulting and systems integration. Michael Dickerson, a spokesman for Computer Sciences, said, "Mynd has a large base of installed products, and they have a prestigious client base

that will benefit from CSC's consulting, systems integration, outsourcing, services, program and project management."

Computer Sciences sued Policy Management Systems in January, contending that Policy Management unlawfully acquired technology secrets from it when an employee left Computer Sciences to work for Policy Management. Policy Management filed a countersuit since then, Dickerson said, although he did not have details on it. "The feeling is that those issues are manageable," said Dickerson, who would not comment further on the status of the suits.

Policy Management Services had revenue of $644 million for the fiscal year ended Dec. 31, 1999. When the merger is complete, Computer Sciences will have global revenue of over $2.7 billion in the financial-services information technology industry.