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January 07,2021
Atos SE Confirms Unsolicited Bid for DXC
Financial Information
- Not Disclosed
Transaction Update
- French IT Services company Atos SE (XPAR:ATO) confirmed Thursday that it had made a bid to acquire US IT Services giant DXC (NYSE:DXC) Wednesday night.
- Valuation of the offer was not disclosed, but the offer was reported to be more than $10 billion including debt (DXC’s debt rose to $9.9 billion in 2020 from $7.4 billion in 2019).
- DXC stock closed Thursday trading up 9.3 percent while Atos stock dropped 13.1 percent.
martinwolf Analysis
- Size Matters: Atos’ logic behind this transaction is simple: the easiest way to generate profitability is by rationalizing costs. DXC and Atos are both global services players with significant overlap — which means there is ample opportunity to save money as a combined organization.
- Not Quite Plug and Play: DXC, formed in 2017 as a consolidation of Computer Sciences Corp (CSC) and HP Enterprise’s tech-services business, has been an active buyer and seller. But a consequence of this patchwork history is that the company does not have one coherent culture. Should this proceed to a transaction, expect a significant integration process.
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Carving Out a Focus: Atos and DXC are both focused largely, but not exclusively, on old-line services. This transaction doesn’t push the envelope –one reason it’s not surprising Atos’ share price dropped — but that does not mean it’s a bad move for shareholders. One thing for sure: it will be a lot of work.
The potential transaction was first reported in Reuters.
martinwolf was not the advisor in this transaction.
