Sprint Corp. and Electronic Data Systems Corp. say they are no longer considering a merger but are continuing to discuss other potential strategic relationships.
The companies said they were unable to reach an agreement on the financial terms of a merger of equals.But Les Alberthal, EDS chairman and chief executive, and William Esrey, chairman and chief executive of Sprint, said the companies believe the convergence of the telecommunications and data processing industries will create tremendous opportunities.
"We have been in discussions concerning how to best integrate these converging functions for the benefit of our customers," they said in a joint statement.
"Part of those discussions involved exploring a merger of equals. That option is no longer being being discussed, but there may be other ways we can work together to achieve strategic objectives," they said.
The Wall Street Journal, which reported in Monday's edition that the merger talks had been suspended, said the sticking point was Sprint's demand that its shareholders get 1.3 shares in the merged company for each Sprint share.
It said EDS proposed giving Sprint shareholders 1.1 shares in the new company for each Sprint share. Th report cited unidentified people close to the companies.
Meanwhile, EDS' parent, General Motors Corp., said Monday it would consider a proposal to spin off EDS if necessary to help the data firm achieve its strategic objectives.
Such a spinoff could occur through an exchange of EDS common for its Class E stock and would only be proposed through a tax-free transaction, GM said.
Sprint is the nation's third-largest long-distance carrier behind AT&T Corp. and MCI Communications Corp. EDS provides data processing services around the world.