Atos would directly benefit from the market consolidation of a direct competitor, while DXC Technology, which has historically prioritized its fiduciary responsibility, would seize the chance for its shareholders to capitalize on the opportunity and end its seemingly perennial turnaround efforts,’ according to Technology Business Research.By Donna Goodison January 08, 2021, 05:59 PM EST1 23… 6Next
If French solution provider Atos consummates its proposed acquisition of DXC Technology, the combined entity would be the second-largest global IT services vendor, according to a new report today.
The combined company would be closer in size to Accenture and larger than India’s Tata Consultancy Services and IBM Services after the latter’s spin-off of its managed infrastructure services business that’s expected by year’s end, according to Technology Business Research (TBR), an IT, telecom and professional services advisory company based in Hampton, N.H.
“With DXC Technology, Atos would gain scale in the U.S., something the company has been pursuing in fits and starts over the last five years, often through acquisitions as well as changes in leadership in North America,” TBR said in a report today. “Atos could leverage skills in transforming ailing companies such as Siemens IT Solutions and Services and Xerox’s ITO (IT outsourcing) business to swallow a larger competitor that has declining revenues and negative profit margin, particularly given Atos’ experience in successful integrations. Atos would directly benefit from the market consolidation of a direct competitor, while DXC Technology, which has historically prioritized its fiduciary responsibility, would seize the chance for its shareholders to capitalize on the opportunity and end its seemingly perennial turnaround efforts.”
Shares of the troubled, debt-saddled DXC saw a big boost yesterday on news of the unsolicited overture by Atos, with the gains making it one of the biggest moving U.S. stocks.
Atos yesterday acknowledged it proposed a potential “friendly” transaction with DXC that would bring the Tysons, Va.-based B2B IT services firm into its fold and boost Atos’ presence in the United States, where it already generates close to 30 percent of its annual revenue.
Atos and DXC would not confirm the size of the acquisition offer, but Reuters, citing two unnamed sources, put at $10 billion, including debt. DXC’s market capitalization — which refers to the total dollar market value of its outstanding stock shares and is the most commonly used method of measuring the size of a publicly traded company — was approximately $6.7 billion when the market closed Wednesday.
Atos has been on an acquisition tear over the last year, acquiring or entering into talks to acquire 12 companies. A DXC acquisition at $10 billion would be its largest after its $3.4 billion to buy Michigan-based IT services provider Syntel in a cash deal in 2018.
A combined Atos-DXC would have North American revenue exceeding an estimated $23 billion and would hold the No. 3 spot on CRN’s Solution Provider 500 list behind No. 1 IBM and No. 2 Accenture. DXC is currently No. 3 on the list, which is ranked by revenue, and Atos is No. 25.
Here’s a look at the proposed Atos-DXC deal, the players, what analysts say about the possible tie-up and the market reaction.
Source:
https://www.crn.com/slide-shows/cloud/5-things-to-know-about-a-possible-atos-dxc-technology-deal