DXC Technology has received takeover interest from at least one private equity firm, though the IT services company has not received a formal buyout offer, DXC said in a statement.
The potential suitor is Baring Private Equity Asia, according to SeekingAlpha. A potential DXC takeover price is around $45 per share, according to StreetInsider. Still, that alleged target figure seems far-fetched, considering DXC's current stock price of about $27.06-- which represents a market cap of about $5.99 billion, according to Seeking Alpha.
The M&A speculation, swirling since September 2022, comes after DXC sold off multiple business units from March 2020 through August 2022 (see timeline further below). Overall revenue at the company was $3.71 billion for Q1 of fiscal 2023, down 10.5% from Q1 of fiscal 2022.
DXC Seeks to Improve Balance Sheet, Cash Flow
In an August 2022 statement about the DXC's earnings, CEO Mike Salvino said:
"Our transformation journey is creating value and we are confident that we are taking the right steps for DXC in the short term that will set us up for success in the long term. I am pleased with the quality of company DXC has become with our stable debt, sound capital allocation strategy, focus on free cash flow generation, investment grade credit profile, improved governance, and our consistent growth in GBS. Our focus now is to accelerate our cost optimization to drive out $500 million in cost by year end, setting the company up for long term success."
DXC Technology, based in Ashburn, Virginia, has 94,000 employees listed on LinkedIn. Key areas of expertise include business process outsourcing, analytics and engineering, application modernization, security, cloud migrations, IT outsourcing, and workplace modernization projects
Timeline: DXC Buyout Rumors, Asset Sales
Here is a regularly updated timeline tracking a potential DXC Technology company sale:
- September 21, 2022: KKR may be interested in acquiring DXC, Betaville reported.
- September 21, 2022: DXC was approached about a potential company sale, Bloomberg reported.
- September 1, 2022: DXC cancelled an appearance at a Deutsche Bank conference in Las Vegas, prompting speculation that the company may be involved in M&A negotiations, SeekingAlpha reported.
- August 2022: DXC sold two Microsoft Dynamics business units to SA.global.
- February 2022: DXC announced plans to sell off business assets that generate roughly $500 million in annual revenue.
- February 2022: French IT services giant Atos pursued and then abandoned a DXC acquisition.
- December 2021: DXC sold an IT services arm in Israel to Ness for $65 million.
- January 2021: DXC sold its Fixnetix trading services unit to Options Technology.
- July 2020: DXC sold its healthcare software provider business to Dedalus Group for $525 million.
- March 2020: DXC sold its U.S. State and Local Health and Human Services Business to Veritas Capital for $5 billion.
Hot MSP, IT Services Market Also Has Laggards
Although the overall IT services and IT consulting markets remain strong, multiple global systems integrators and enterprise MSPs are under-performing the market. In addition to DXC, market laggards that are seeking to improve financial performance include Atos and Rackspace among many others.
Story originally posted September 28, 2022. Updated regularly thereafter.
