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Computer Sciences to Buy Australia-based UXC for $300M

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Continuing with its strategy of growing through acquisitions, Computer Sciences CorporationCSC is gearing up for its fourth takeover this year, ahead of its planned November split. The company yesterday confirmed a deal to acquire UXC Limited - an Australia-based IT services company.

As per the agreement, Computer Sciences will buy all the 340 million outstanding shares of UXC at A$1.26 per share, translating into approximately A$428 million or US$300 million. Apart from this, the shareholders of UXC will also receive a cash dividend of 2 cents.

Computer Sciences says that "the transaction is subject to completion of a five-week exclusive due diligence process, negotiation of a Scheme of Implementation Agreement and respective board approvals, along with customary regulatory and court approvals for transactions of this type in Australia." If all goes well, the acquisition is anticipated to be closed by Feb 2016.

With reported fiscal 2015 revenues of A$686 million or US$480 million and a 3,000 strong workforce, UXC is Australia's largest locally owned & managed IT services company. The company operates under three business units - Consulting and Advisory, Enterprise Applications and IT Infrastructure.

Under the Consulting and Advisory business unit, UXC focuses on research, analytics, communication and cybersecurity. The company's Enterprise Application business unit mainly focuses on strategy and design making, project management, testing and application support. Under the IT Infrastructure unit, it offers cloud, data center, enterprise mobility and managed services.

The acquisition will help Computer Sciences to enhance its operations in the country by offering a wider range of cloud-based service management solutions. This will help its clients to improve business results through organizational efficiency and lower operating costs. Additionally, the move will also bring in more customers.

Over the past few years, Computer Sciences has been focusing on the cloud computing market and Big Data business to cash in on growing demand. Companies are increasingly relying on cloud-based services that make IT systems more agile and productive, and save costs considerably.

Computer Sciences has also made a few important acquisitions, such as that of North California-based cloud infrastructure provider, Autonomic Resources, in Feb 2015. The buyout bolstered the company's cloud as well as enterprise digital solution offerings. Apart from this, the company last month acquired two companies - Fruition Partners and Fixnetix.

Furthermore, it is to be noted that Computer Sciences is in the process of splitting into two separate publicly traded companies. According to the company, one will "serve commercial and government clients globally", while the other will "serve public sector clients in the United States." The new businesses will be named CSC Global Commercial and CSC US Public Sector, respectively.

It is believed that the acquisition of UXC will add value to CSC Global Commercial business. However, we believe that it is too early to determine the actual benefits of the buyout due to intensifying competition in the IT services industry space.

Currently, Computer Sciences carries a Zacks Rank #2 (Buy). Other stocks worth considering in the broader technology sector are Ciber Inc CBR , Ebix Inc. EBIX and Avago Technologies Limited AVGO , all carrying the same Zacks Rank as Computer Sciences.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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