IT Services Giant CSC to Acquire Australian Giant UXC

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There were two significant channel announcements today, one in the Asia Pacific region, the other in North America.

IT services giant CSC has announced that it has entered into exclusive negotiations to acquire the shares of UXC Limited (subject to due diligence, board approvals, and other requirements).

With the acquisition, CSC takes on a strong client base in the North America, but also in ASEAN via UXC’s presence in Vietnam, India, Malaysia, Singapore, Fiji, Australia, and New Zealand

CSC is already a major global company; billing itself as “a global leader of next generation information technology (IT) services and solutions.” It has about 70,000 employees in 70 countries, and reported revenue of $11.7 billion for the 12 months ended July 3, 2015. UXC calls itself “Australia’s largest locally owned and managed IT services company,” with nearly 3,000 and annual revenues of close to US $499 million (A$700) million and around 2,500 customers. UXC is just 13 years old, and only announced its North American expansion in 2013, so the bulk of that portfolio is in ASEAN.

On top of that, UXC is a powerful Microsoft Dynamics partner. Its division UXC Eclipse was recently named the 2015 Microsoft Dynamics Industry Partner of the Year, largely for its efforts to deliver Dynamics AX in the retail sector in North America and Australia. UXC globally reported US$20 million in new AX business in the four months ending in June of this year.

As we reported in June, UXC Eclipse at the time was seeing three quarters of its new revenue from retail clients (the division’s vertical focus). Major US/Canadian clients include Canadian pharmacy chain Jean Coutu Group, Bartell Drugs, DAVIDs Tea, Carol’s Daughter, Sherry‐Lehmann Wines & Spirits, Everlast, and David’s Bridal.

The agreed-upon price for the CSC/UXC acquisition would be US$.90 (A$1.26) per share. Based on 340 million shares of UXC outstanding, the purchase price would be approximately US$300 million upon completion. 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 the process results in a transaction, it would be expected to be finalized by February 2016.