DXC Technology Ends Takeover Talks With ‘Financial Sponsor’
The $16.3 billion solution provider says it has ‘terminated’ acquisition discussions with a potential buyer.
DXC Technology, the $16.3 billion solution provider giant, has terminated talks with a potential buyer after months of speculation that the company could be acquired from a private equity firm.
“Due to the financial sponsor’s challenges in raising the necessary capital, as a result of current market conditions, no formal proposal was received by the company and DXC has terminated the discussions,” said DXC Technology in a statement posted Monday.
In late 2022, the Ashburn, Va.-based company disclosed that a private equity firm, or “financial sponsor” was looking to acquire DXC.
[Related: DXC Technology Earnings Preview]
Throughout the process, DXC said its team has been focused on driving the company to “its inflection point”.
“DXC remains well positioned to deliver the business it envisioned for its people, customers, and shareholders, a business that grows organically and expands margin, earnings per share and free cash flow,” the company said.
DXC Technology declined to comment further on the matter. The solution provider and consultant specialist has around 130,000 employees on a worldwide basis.
DXC’s stock fell more than 4 percent to $27.16 in trading Tuesday.
DXC’s Acquisition History
Discussion about a possible takeover of DXC Technology has been rumored for years, including fellow solution provider giant Atos potentially buying DXC in 2020. However, Atos pulled out of the bid in early 2021.
In September, DXC Technology was reported to be the target of acquisition talks by at least one unnamed private equity firm after DXC abruptly pulled out of its investor presentation at a Deutsch Bank conference earlier that month. The company later confirmed that it was in discussions with a “financial sponsor.”
“Consistent with its fiduciary responsibility to maximize shareholder value, the company is engaged in preliminary discussions and is sharing information,” DXC said in October. “However, to date no formal proposal has been received. There are no assurances that any proposal will be received or determined to be adequate by the board of directors.”
DXC was founded in 2017 when Hewlett Packard Enterprises’ enterprise services business merged with Computer Science Corp (CSC).
The company’s revenue has been slipping over the past few years.
In fiscal year 2022, DXC Technology generated $16.26 billion in revenue, down more than 8 percent compared to $17.7 billion in fiscal year 2021.
In February, DXC reported third fiscal quarter 2023 sales of $3.6 billion, representing a decrease of 13 percent year over year. The company generated net income of $61 million, down from $102 million in third quarter 2022.