https://www.bizjournals.com/washington/news/2024/06/11/dxc-technology-apollo-global-kyndryl-acquisition.html
By: Alan Kline – Senior Editor, Washington Business Journal
Jun 11, 2024 Updated Jun 11, 2024 1:18pm EDT
DXC Technology Co. (NYSE: DXC), an Ashburn IT giant and one of Greater Washington’s largest public companies, is in talks to sell itself to a joint venture for up to $4.5 billion, according to news reports.
Citing people familiar with the discussions, Reuters reported late Monday that buyout firm Apollo Global Management and Kyndryl Holdings Inc., an information services provider that was spun out of IBM in 2021, are assembling a joint bid to acquire DXC for between $22 and $25 per share. That would value DXC at between $3.9 billion and $4.5 billion, based on its roughly 179 million outstanding shares as of June 4.
DXC’s shares climbed 11.5% Monday on rumors of the potential sale, closing at $18.45 and boosting its market capitalization to around $3.3 billion. The shares were up another 3% in premarket trading Tuesday.
DXC, which has seen its revenue decline in recent years as customers have reduced spending, is also in separate talks to sell its insurance software business for more than $2 billion, Reuters reported, citing people familiar with the discussions.
A DXC spokesperson said in an email Tuesday that the company does not comment “on market rumors or speculation.”
It’s hardly the first time DXC has been the subject of buyout discussions. In late 2022, the company was reportedly approached by an investment group — rumored to be either Hong Kong’s Baring Private Equity Asia Ltd. and New York City investment giant KKR & Co. Inc. — but ended discussions in early 2023 after the buyer was unable to come up with the financing to fund a deal.
French IT company Atos SE also made a $6.7 billion bid for DXC in early 2021, but the local company declined, calling the offer “inadequate.”
The two rumored buyers have very deep pockets. Kyndryl (NYSE: KD), which specializes in infrastructure IT services, has a market value of $6 billion. Apollo, co-founded by Washington Commanders owner Josh Harris, is one of the world's largest investment firms, with $671 billion in assets under management.
The latest sale rumors come less than a month after DXC unveiled plans to cut costs and restructure operations amid a sharp decline in sales. For the fiscal year that ended March 31, the company reported revenue of $13.7 billion, down 5.3% from the $14.4 billion in 2023 and nearly 16% from the $16.3 billion it reported in 2022. Its shares are down 19% year to date and 29% over the past year.
To help bolster its share price, the company has repurchased about 32% of its outstanding shares since the end of fiscal year 2021.
DXC was formed in 2017 when Hewlett Packard Enterprise Co. spun off its enterprise services business and merged it with Tysons-based Computer Sciences Corp. Mike Salvino served as its CEO from 2019 until late last year, when he abruptly stepped down and was replaced on an interim basis by board member and longtime D.C.-area executive Raul Fernandez. Fernandez, also the vice chairman and partner of Monumental Sports & Entertainment, was named permanent CEO in February.
DXC was ranked last year as the D.C. region’s 11th-largest public company, based on 2022 revenue, according to Washington Business Journal research. It ranked No. 294 in Fortune magazine’s latest list of the nation’s 500 largest public companies, down 39 spots from last year’s ranking.
DXC has about 130,000 employees globally.