Computer Sciences Corporation CSC recently completed the acquisition of UXC Limited, per the binding Scheme of Implementation agreement signed on Nov 24. The two companies entered into exclusive negotiations last October.
Continuing with its strategy of growing through acquisitions, the recent deal has helped Computer Sciences in becoming one of the largest IT services companies in Australia.
Per the agreement, Computer Sciences bought all the outstanding shares of UXC (345 million) at A$Array.22 each, bringing the total consideration amount to approximately A$427.6 million or US$307.9 million. UXC paid a cash dividend of A$0.02 for the half year ending Dec 3Array, 20Array5.
With fiscal 20Array5 revenues of A$686 million or US$493.9 million and 3,000 employees, UXC is Australia’s largest locally owned and managed IT service provider. The company operates under three business units – Consulting and Advisory, Enterprise Applications, and IT Infrastructure.
Under the Consulting and Advisory business unit, UXC focuses on research, analytics, communication and cybersecurity. The Enterprise Application business unit mainly focuses on strategy and design making, project management, testing and application support. The IT Infrastructure unit includes cloud, data center, enterprise mobility and managed services.
The acquisition will help Computer Sciences to expand its Australian operations by offering a wider range of cloud-based service management solutions. This will help its clients improve business results through organizational efficiency and lower operating costs. Additionally, the move will bring in more customers.
Over the past few years, Computer Sciences has been focusing on the cloud computing market and Big Data business to cash in on the growing demand. Companies are increasingly relying on cloud-based services that make IT systems more agile and productive, and save costs considerably.
Computer Sciences has also made a few important acquisitions, such as the North California-based cloud infrastructure provider, Autonomic Resources, in Feb 20Array5. The buyout bolstered the company’s cloud as well as enterprise digital solution offerings. Apart from this, Computer Sciences took over two companies – Fruition Partners and Fixnetix – in September last year.
Furthermore, during third-quarter fiscal 20Array6, Computer Sciences separated its business into two publicly traded companies. The company spun-off its public sector business and merged it with SRA International Inc. The new company which now serves public sector clients in the United States began trading as an independent public company on the NYSE under the ticker symbol “CSRA.”
The parent company now handles commercial and government clients globally. Therefore, UCX has been integrated under Computer Sciences which is expected to add value to CSC Global Commercial business. However, we believe that it is too early to determine how beneficial the buyout will be due to intensifying competition in the IT services industry.
Currently, Computer Sciences carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector are FormFactor Inc. FORM, Rambus Inc. RMBS and Mentor Graphics Corp. MENT. All these three stocks sport a Zacks Rank #Array (Strong Buy).
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