CSC May Not Have Sealed Deal For Xchanging Just Yet

One day after Computer Sciences Corp. said its offer to buy British outsourcing firm Xchanging was accepted by its board, a Georgia insurance software provider reaffirmed its interest in making a bid.

In a statement released Thursday, Ebix Inc. of Johns Creek, Ga., about 25 miles north of Atlanta, reiterated its interest in making an offer for Xchanging. In mid-November, the company said it had sent a letter to Xchanging's board, stating it was interested in offering about $685 million for the company. But Ebix on Thursday cautioned that there was no certainty it would make a formal offer.

CSC had apparently emerged the victor this week in what had been a three-company pursuit for Xchanging when the boards for both firms agreed to an all-cash deal for $720 million. CSC -- ranked No. 5 on CRN's 2015 Solution Provider 500 list before its November split with CSRA -- had raised its offer last month to $2.58 a share -- reportedly about $640 million -- as it battled with two other primary suitors. That came more than a month after Xchanging had agreed to be bought out by Capita PLC, another U.K.-based outsourcing company, for $2.43 a share, or reportedly about $627 million.

[Related: CSC Wins 3-Way Battle To Buy London-Based IT Outsourcer]

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A third company, private equity firm Apollo Global Management of Purchase, N.Y., had also been part of the battle. But according to published reports, Apollo withdrew from discussions in early November, ceding the field to CSC and Capita. Earlier this month, Capita reportedly extended its all-cash offer a second time. On Wednesday, Reuters reported that Capita is holding firm on its offer.

London-based Xchanging provides IT outsourcing as well as business processing and procurement services to clients in Europe, Australia and the U.S. In its announcement Wednesday, CSC noted Xchanging's presence in the commercial insurance market.

"Xchanging's capabilities and experience in the commercial insurance market would complement CSC's global insurance presence in software, outsourcing and services," CSC President and CEO Mike Lawrie said in a statement.

It has been a very active year for CSC, highlighted by last month's separation of its $8.1 billion commercial and $4.1 billion public sector businesses. The latter division merged with SRA and was renamed CSRA, creating the world's largest pure-play U.S. government security provider.

The commercial business, which retained the name CSC, is trying to reverse its sagging fortunes through a series of acquisitions. In October, it said it would buy Australian IT services provider UXC Ltd. for about $300 million. That merger is expected to close in February. In August, it announced the purchase of London-based managed trading solutions provider Fixnetix, as well as Fruition Partners, a 300-person, cloud-based service management firm in Chicago.

CSC is an $8.1 billion business with 56,000 employees globally. In the fiscal quarter that ended Oct. 2, CSC's sales fell 7.2 percent, to $2.71 billion, after factoring for changes in foreign currency exchange rates.

In a filing Wednesday with the U.S. Securities and Exchange Commission on the accepted offer for Xchanging, CSC said it plans to expand Xchanging's market reach by boosting CSC sales to Xchanging clients and building a services business around Xchanging's Xuber insurance software platform. CSC also said it expects to generate ongoing annual cost savings in the range of about $75 million to $91 million within 12 to 18 months after the deal is completed.

PUBLISHED DEC. 10, 2015