DXC Sells Selected Assets to Veritas Capital for $5B
DXC Technology is selling its U.S. State and Local Health and Human Services Business to Veritas Capital for $5.0 billion, the IT consulting firm disclosed on March 10.
DXC has been trying to sell the businesses since at least November 2019. Veritas Capital is a logical buyer. The private equity firm has extensive experience acquiring and optimizing businesses in the government IT services market.
This is M&A deal Number 147 that ChannelE2E has covered so far in 2020. See the complete M&A deal list here.
The deal is expected to close by December 2020. The after-tax proceeds from the transaction will be used to pay down debt, DXC said. Also, DXC plans to retain its healthcare business that includes servicing customers from life sciences firms, Reuters reported.
Veritas Capital: Private Equity Background
Private equity firm Veritas Capital has been active in the government M&A market. Recent deals include:
- August 2019: Guidehouse, backed by Veritas Capital, acquired Navigant Consulting for $1.1 billion.
- February 2018: Acquiring PwC’s U.S. public sector business at an estimated price of roughly $500 million.
- January 2017: Buying Harris Corp.’s government IT services business for $690 million in cash.
DXC Business, Leadership Evolution
DXC Technology is a 2017 merger of the former Computer Sciences Corporation (CSC) and the Enterprise Services business of Hewlett Packard Enterprise. The company named Salvino as president and CEO after delivering disappointing financial results in September 2019. He succeeded Mike Lawrie, who retired.
DXC has spent recent quarters acquiring various cloud, IT consulting and digital services businesses that focus on ServiceNow, Salesforce, SAP, Microsoft Dynamics, and data center skills. The buyouts include Tribridge, Logicalis SMC, System Partners, TESM and BusinessNow; Luxoft; an EG A/S services arm; a Credit Suisse data center; and Syscom.
DXC’s acquisition strategy is somewhat akin to Accenture’s M&A moves. Accenture has spent heavily to acquire digital, cloud, and cybersecurity companies worldwide.