Search
Homepage Rankings and Research Companies Channelcast Marketing Matters CRNtv Events WOTC Cisco Partner Summit Digital 2020 Lenovo Tech World Newsroom HPE Zone Masergy Zenith Partner Program Newsroom Dell Technologies Newsroom Fortinet Secure Network Hub Hitachi Vantara Digital Newsroom IBM Newsroom Juniper Newsroom The IoT Integrator Lenovo Channel-First NetApp Data Fabric Intel Tech Provider Zone

Atos Pulls Out Of DXC Technology Bid

‘DXC remains confident in its transformation journey focused on delivering for our people, customers, and shareholders,’ the company says in a statement.

DXC Technology’s short-lived romance with French solution provider and serial acquirer Atos is officially kaput.

DXC, the Tysons, Va. solution provider that’s No. 3 on the 2020 CRN Solution Provider 500, said in a statement Monday night that the two sides have opted to “discontinue further discussions.”

“The DXC Board of Directors carefully evaluated the proposal, together with its financial and legal advisors. The offer was determined to be inadequate and lacking certainty in light of the value the Board believes DXC can create on a standalone basis by executing our transformation journey,” DXC said in a statement. “After sharing certain high-level information in order to help Atos understand why the Board believes the proposal undervalued DXC, Atos and DXC today agreed to discontinue further discussions.”

DXC Technology and Paris-based IT services company Atos confirmed they were discussing a deal in early January. At the time, Atos said it was considering “a potential friendly transaction between the two groups in order to create a digital services leader benefiting from global scale, talent and innovation,” the Bezons, France-based Atos said in a statement.

The deal was deemed “modestly attractive” by longtime DXC analysts MoffettNathanson. Atos, No. 25 on CRN’s 2020 Solution Provider 500 list, had reportedly offered $10 billion for the Tysons, Va. solution provider.

DXC said in Monday’s statement that it was comfortable walking away from the potential merger, given the path to growth it had charted.

“DXC remains confident in its transformation journey focused on delivering for our people, customers, and shareholders,” the company said in a statement.

Atos has been on an acquisition spree, acquiring or entering into negotiations to buy 12 companies in the last year, the latest being Motiv ICT Security, a cybersecurity company based in the Netherlands. Atos last month said it had reached an agreement to buy Motiv, which specializes in managed security services and security operation center services, for undisclosed terms in a deal expected to close in the first quarter.

Reuters said a DXC acquisition would be Atos’ largest ever. Atos declined comment beyond its statement.

Before the companies parted ways, MoffettNathanson said whether the deal benefited DXC shareholders depended on how much higher than $10 billion Atos was willing to go. At a $12 billion evaluation, DXC’s shareholders would have received $33.7 per share or about a 30 percent premium to the Dec 31 close, and 6 percent above the analysts 12-month target price for DXC.

MoffettNathanson said DXC is improving under the leadership of CEO Mike Salvino, who has done away with price concessions and rapid head-count reductions that led to customer churn. The analyst said thanks to its deep relationships with enterprises DXC is “recession resilient,” and on track to stabilize revenues by late 2021.

“We believe much of DXC’s recent deterioration in performance was driven by execution errors by the prior management team … which have since been halted or reversed. Although DXC’s core business is in structural decline, it is sticky, highly-recurring, and reasonably recession-resilient; we expect DXC can, over time, stabilize revenues at ~ flat, and, with revenue stability will come margin stability and better FCF generation.”

Back to Top

Video

 

trending stories

sponsored resources