How UXC's potential merger with CSC will affect the tech services industry
In a deal that could potentially be worth $428 million, US tech giant Computer Sciences Corporation (CSC) is making an effort to purchase Australia’s UXC, which is the nation’s largest tech services group.
It is CSC’s third acquisition announced since August by its $8.1 billion commercial business, which will separate from its $4.1 billion U.S. public sector business next month.
UXC will recommend its shareholders accept CSC’s offer, and will also have an independent analyst give their opinion of whether or not it’s the best move for the shareholders. If the deal goes through, UXC investors will receive payments of $1.28 per share and the acquisition would be complete by February 2016.
Previously in 2011, CSC bought Aussie healthcare technology company iSOFT, although the deal ended unceremoniously behind CSC being forced to take legal action due to iSOFT’s failure to pay contractual entitlements.
UXC, a group of enterprise services companies that has grown by acquisition, recently announced the signing of several new contracts as companies have begun spending more money on technology. The Aussie tech company has annual revenue of $686 million, and a partnership between UXC and CSC would make it one of the region’s top IT services companies based on revenue.
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The two sides have agreed to a five-week due diligence period, during which UXC won’t negotiate with or seek any other suitors. Although UXC’s board will consider other offers that come in, CSC will have the right to match any other offer, making it difficult for another company to out-bid CSC.
If the deal is completed, CSC’s 2100 employee operation and UXC’s 3000-person corporation would combine for total revenue of over $1.4 billion in 2015.
CSC’s wide array of service includes enterprise software, managed services, consulting, security, infrastructure-as-a-service and more.
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UXC managing director Cris Nicolli indentified three aspects in which the two companies would complement each other, including Microsoft Dynamics. UXC is in the top one per cent of Microsoft Dynamics resellers across the globe, while it also has strong relationships with Oracle, SAP and ServiceNow Australia and New Zealand.
In addition, Nicolli believes the health sector and both companies security businesses are also key strengths.
“The proposal from CSC recognises the potential of UXC and is a testament to the strong business we have built,” said Nicolli. “The board of UXC is supportive of this move.
“All of us at UXC are tremendously proud of what we've achieved to date, and the proposal from CSC represents a potential next stage in the evolution of our company.”