Unique: French IT Agency Atos Makes $10 Billion DXC Bid Strategy

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LONDON: France’s Atos confirmed on Thursday it has made a bid strategy for U.S. rival DXC Technology in what can be the deal-hungry IT consulting group’s largest ever acquisition.

Atos issued an announcement confirming a Reuters report that’s in search of to purchase DXC in what it stated was a “pleasant transaction” to create a digital providers powerhouse with a worldwide presence.

The French agency, led by chief government Elie Girard, made a proper strategy to DXC this week valuing the New-York listed firm at greater than $10 billion together with debt, two sources advised Reuters on situation of anonymity.

DXC didn’t reply to requests for remark.

Atos is working with advisers on the potential provide for the previous Hewlett Packard Enterprise enterprise, which might enhance its presence in the USA, giving it entry to a variety of shoppers and B2B merchandise together with analytics and cloud purposes in addition to IT outsourcing providers.

Discussions are nonetheless at a preliminary stage and there’s no certainty {that a} deal can be agreed, the sources stated.

DXC shares have been up 8% to $28.50 in pre-market buying and selling in New York, whereas Atos dropped 10% on the information, making it the worst performing inventory on the Paris SBF-120 index.

If profitable, a mixture with DXC would result in synergies and value financial savings for Atos, which has been on an acquisition spree in recent times, the sources stated.

The French agency spent $3.four billion to purchase Michigan-based IT providers supplier Syntel in a money deal in 2018, rating as its largest deal up to now.

It’s now trying to make the most of investor urge for food for pandemic resilient belongings in know-how to clinch a deal that will be within the area of its personal market worth of 8.2 billion euros ($10.1 billion), the sources stated.

Atos stated in its assertion it will apply “monetary self-discipline” in pursuing a bid for DXC, cautioning that there was no certainty that the strategy would lead to any settlement.

RISING DEBT

DXC, based in 2017 when Hewlett Packard Enterprise spun off its enterprise providers enterprise, has been grappling with rising debt, with boss Mike Salvino taking the helm in 2019 and subsequently asserting a strategic evaluate of non-core belongings.

“DXC is just too small to function by itself in a low margin world,” one of many sources stated.

DXC unveiled plans on Wednesday to promote its Fixnetix unit – which supplies outsourced front-office buying and selling providers to funding banks, hedge funds and exchanges – to Choices Technology for an undisclosed quantity.

Final yr it pocketed $5 billion from the sale of its healthcare know-how enterprise to personal fairness agency Veritas Capital.

The Tysons, Virginia-based agency, which has a market worth of $6.7 billion, noticed its revenues fall to $19.6 billion in 2020 from $20.75 billion in 2019 whereas its whole debt rose to $9.9 billion in 2020 from $7.four billion in 2019.

Atos has not too long ago launched into a collection of bolt-on acquisitions, shopping for cybersecurity, synthetic intelligence and digital consultancy corporations in a bid to develop its revenues by 5% to 7% within the mid-term.

It purchased synthetic intelligence and knowledge science agency Miner & Kasch in April and U.S.-based cloud consulting group Maven Wave in 2020, in addition to cybersecurity agency IDnomic and power specialist X-Perion in 2019.

After cancelling its 2020 dividend payout in April, Atos stated it will keep its dividend coverage and use remaining free money circulation to finance additional acquisitions.

($1 = 0.8149 euros)

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