CSC to buy UXC for $428m

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CSC to buy UXC for $428m

Five week due diligence under way.

Global IT solutions provider CSC is working to buy publicly listed Australian IT services provider UXC Limited for $428 million, in what could create one of Australia's biggest IT services companies.

The companies are currently engaged in exclusive negotiations over a scheme of implementation agreement, and CSC has begun a five-week due dilligence process.

The price of the acquisition would be $1.26 for each of UXC's 340 million shares, bringing the total to around $428 million.

UXC reported revenue of $686 million last year, and employs 3000 workers, making it Australia's largest publicly-owned IT services company.

Should the acquisition meet board and other approvals, the deal would be finalised by next February, CSC said.

UXC boss Cris Nicolli said the CSC proposal had the UXC board's approval. The company is free to look at other offers, he said.

His company's large customer base spans ten verticals and includes the likes of Ausgrid, Melbourne Water, Australia Post, Target, NAB, ANZ Bank, Toyota, Cadbury, Queensland Health, the Department of Human Services, Rio Tinto, BHP Billiton, nine of the country's universities and Australia's three major telcos.

Its business covers three main operating divisions including IT consulting, enterprise applications and IT infrastructure.

In May this year UXC added to its business by acquiring SAP Hybris systems integrator Contiigo.

CSC has global operations and employs around 70,000 workers, with 2100 in Australia. It reported revenue of $11.7 billion for its last fiscal year.

It has struggled recently in Australia, with annual revenue falling by $127.2 million in its fiscal year ended March 31 2015.

Sales for the year came in 15 percent lower than the previous year, at $724 million, and its profit also plunged 44 percent to $38.7 million.

CSC global boss Mike Lawrie has attributed some of the solutions provider's problems to difficulties coping with the growth of cloud computing, admitting earlier this year he "missed some of the dynamics associated with the acceleration to cloud".

"It ... had a bigger impact than what I thought it was going to have in 2015," he said at the time.

The company has also been the subject of acquisition speculation itself, with HP reportedly coming close to taking over CSC in what would have been a multi-billion dollar deal.

Unable to secure a buyout, the company later decided to separate its government business from its commercial information technology operations.

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