CSC Announces Merger with Enterprise Services Segment of Hewlett Packard Enterprise to Create Global IT Services Leader | Business Wire

TYSONS, Va.–(BUSINESS WIRE)–CSC

(NYSE: CSC) today announced that its Board of Directors has unanimously

approved a plan to merge the company with the Enterprise Services

segment of Hewlett Packard Enterprise (HPE).

The strategic combination of the two complementary businesses will

create one of the world’s largest pure-play IT services companies,

uniquely positioned to lead clients on their digital transformations.

The new company is expected to have annual revenues of $26 billion and

more than 5,000 clients in 70 countries.

The merger is expected to be completed by the end of March 2017, subject

to shareholder and regulatory reviews and approvals. Following the

transaction, CSC and HPE shareholders each will own approximately 50

percent of the new company’s shares. The transaction is intended to be

tax-free to CSC and HPE and their respective shareholders for federal

income tax purposes.

Today’s announcement comes six months after CSC separated into two

publicly traded companies: CSC, to serve commercial and government

clients globally, and CSRA, which serves public sector clients in the

United States. Both CSC and HPE’s Enterprise Services segments have been

on upward trajectories, showing significant improvements in financial

performance and client satisfaction scores.

Following completion of the transaction, Mike Lawrie,

who currently serves as chairman, president and CEO of CSC, will become

chairman, president and CEO of the new company. Meg Whitman, HPE’s

president and CEO, will join the new company’s Board of Directors, which

will be split equally between nominees of CSC and HPE. CSC’s current

CFO, Paul Saleh, will continue in that role after the transaction

closes. Mike Nefkens, the current EVP and GM of HPE Enterprise Services,

will report to Lawrie and will become a key part of the new company’s

executive team. Other executives and directors, as well as the name of

the company, will be announced at a later date.

“Our proposed merger with HPE Enterprise Services is a logical next step

in CSC’s transformation,” Lawrie said. “As a more powerful and versatile

global technology services business, the new company will be well

positioned to innovate, compete and serve clients in a rapidly changing

marketplace. We are excited by the great potential this merger brings to

our people, clients, partners and investors, and by the opportunity to

strengthen our relationship and collaboration with HPE.”

“The ‘spin-merger’ of HPE Enterprise Services with CSC is the right next

step for HPE and our customers,” said Whitman. “Enterprise Services’

customers will benefit from a stronger, more versatile services

business, better able to innovate and adapt to an ever-changing

technology landscape. As two companies with global scale, strong balance

sheets and a focus on innovation, both HPE and the new company will be

well positioned as leaders in their respective markets.”

Creating a Global IT Services Leader

The combination of CSC and HPE’s Enterprise Services segment will create

a new company with substantial scale to serve clients more efficiently

and effectively worldwide. By combining, both companies can more rapidly

accelerate their already-improved financial and operational performance.

For clients, the new company will offer enhanced global access to

world-class, next-generation offerings – combined with deep industry

experience in key industry sectors.

The merging of these businesses will offer:

  • World-class strength in customer service and IT operations

    among the safest pair of hands in the industry, deploying a broader

    set of resources and expertise to benefit clients;

  • Market-leading industry and technology expertise – industry

    leading experience and IP in areas such as financial services,

    healthcare and life sciences, transportation, consumer products, and

    insurance, helping customers transform faster;

  • Global scale –operating 85 delivery centers and 95 data

    centers across 70 countries, providing access to the most efficient IT

    services in the world;

  • Technology independence and best-in-class capabilities in

    next-generation cloud, security, application development and

    modernization, big data and analytics, mobility, workplace, and

    sophisticated business process and IT services;

  • Combined leadership bringingdeep turnaround experience

    and transformation capabilities, customer relationships, sales/GTM,

    industry and functional expertise;

  • Expanded best-of-breed technology partnerships that provide

    greater choice of solutions; and

  • Enhanced innovation, R&D, and investment opportunities for

    new services and solutions.

CSC’s Go-Forward Strategy Post-Separation

Today’s announcement represents a major step in the post-separation

strategy outlined by CSC’s leadership last fall. At that time, the

company positioned itself as a next-generation IT services company built

specifically to respond to a changing market – one that is driving

clients to move rapidly toward digital transformation.

In just the six months since separation, CSC has taken decisive steps to

equip the company to take clients on this digital journey, positioning

itself as a true next-generation leader in the markets, industries and

practice areas it serves. CSC has:

  • Stood up vertically integrated businesses in healthcare and insurance

    to take full advantage of its IP and existing market leadership;

  • Created CeleritiFinTech, a joint venture with HCL, to do the same in

    banking;

  • Acquired UXC, making CSC one of the largest IT services companies in

    the Australia-New Zealand region;

  • Acquired Xchanging Plc, a UK-based provider of insurance software and

    business process services, creating the number one provider of core

    insurance solutions globally; and

  • Acquired Fixnetix and Fruition Partners to bolster its leadership in

    banking and capital markets and service management, respectively.

    Together, Fruition and UXC make CSC the world leader in service

    management solutions. Yesterday, the company also announced its

    acquisition of Aspediens, Europe’s leading provider of

    technology-enabled solutions for the service-management sector.

“Clients are feeling the pressure to digitally transform their

enterprises to meet new business demands and customer expectations,”

Lawrie noted. “They need a partner with the innovation, scale,

leadership and dependability to answer the challenge.

“As a pure play, the combined company will be built to lead digital

transformations using next-generation technology solutions from both

companies,” Lawrie continued. “It will be able to operate independent of

any single hardware provider, while partnering with the world’s leading

technology providers, including HPE.”

About the Transaction

The transaction between CSC and HPE is expected to deliver approximately

$8.5 billion to HPE’s shareholders on an after-tax basis. This includes

an equity stake in the newly combined company valued at more than $4.5

billion, a cash dividend of $1.5 billion, and the assumption of $2.5

billion of debt and other liabilities related to the HPE Enterprise

Services segment.

The merger of the two businesses is expected to produce first-year

synergies of approximately $1 billion post-close, with a run rate of

$1.5 billion by the end of year one. There is an opportunity for

additional synergies in subsequent years. As owners of approximately 50

percent of the merged company, HPE shareholders will share in the value

of the synergies, as well as future growth in earnings.

RBC Capital Markets is serving as financial advisor to CSC, and Allen &

Overy LLP is serving as legal advisor.

For More Information

For more insights into today’s announcement, watch this video message

from Mike Lawrie and Meg Whitman. Download the infographic for

additional information.

HPE Investment Community Conference Call

HPE will extend its conference call to discuss its fiscal second quarter

financial results today and to elaborate on the transaction; the call

will start at 4:30 p.m. Eastern Daylight Time (EDT). Mike Lawrie, CSC

chairman, president and CEO, will participate in the call to discuss

this transaction along with HPE management. For webcast details, go to www.investors.hpe.com.

CSC Fourth Quarter 2016 Results Analyst Call Rescheduled for 5:30

p.m. EDT Today

The CSC senior management conference call and webcast, originally

scheduled for 5 p.m. EDT today, will now begin at 5:30 p.m. EDT. The

dial-in number for domestic callers is 888-244-2416. Callers who reside

outside of the United States or Canada should dial 913-312-1384. The

passcode for all participants is 3124172. The webcast audio and any

presentation slides will be available on CSC’s Investor Relations website.

A replay of the conference call will be available from approximately two

hours after the conclusion of the call until May 31, 2016. The replay

dial-in number is 888-203-1112 for domestic callers and 719-457-0820 for

callers who reside outside of the United States and Canada. The replay

passcode is also 3124172. A replay of this webcast will also be

available on CSC’s website.

CSC will release financial results for the fourth quarter and fiscal

year 2016 today at approximately 4:30 p.m. EDT.

About CSC

CSC (NYSE: CSC) leads clients on their digital transformation journeys.

The company provides innovative next-generation technology services and

solutions that leverage deep industry expertise, global scale,

technology independence and an extensive partner community. CSC serves

leading commercial and international public sector organizations

throughout the world. CSC is a Fortune 500 company and ranked among the

best corporate citizens. For more information, visit the company’s

website at www.csc.com.

About HPE

HPE is an industry-leading technology company that enables customers to

go further, faster. With the industry’s most comprehensive portfolio,

spanning the cloud to the data center to workplace applications, our

technology and services help customers around the world make IT more

efficient, more productive and more secure.

Additional Information and Where to Find It

In connection with the proposed transaction, Everett SpinCo, Inc., a

wholly-owned subsidiary of Hewlett Packard Enterprise created for the

transaction (“Spinco”), will file with the SEC a registration statement

on Form S-4/S-1 containing a prospectus and CSC will file with the SEC a

proxy statement on Schedule 14A and a registration statement on Form S-4

containing a prospectus. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO

READ THE REGISTRATION STATEMENTS/PROSPECTUSES AND PROXY STATEMENT WHEN

THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION

ABOUT THE PARTIES AND THE PROPOSED TRANSACTION. Investors and security

holders may obtain a free copy of the prospectuses and proxy statement

(when available) and other documents filed with the SEC by CSC, Hewlett

Packard Enterprise and Spinco at the SEC’s web site at http://www.sec.gov.

Free copies of these documents, once available, and each of the

companies’ other filings with the SEC, may also be obtained from CSC’s

web site at www.csc.com.

This communication is not a solicitation of a proxy from any investor or

security holder. However, CSC, Hewlett Packard Enterprise, and certain

of their respective directors, executive officers and other members of

management and employees, may be deemed to be participants in the

solicitation of proxies from stockholders of CSC in respect of the

proposed transaction under the rules of the SEC. Information regarding

CSC’s directors and executive officers is available in CSCs 2015 Annual

Report on Form 10-K filed with the SEC on June 8, 2015, and in its

definitive proxy statement for its annual meeting of stockholders filed

on June 26, 2015. Information regarding Hewlett Packard Enterprise’s

directors and executive officers is available in Hewlett Packard

Enterprise’s 2015 Annual Report on Form 10-K filed with the SEC on

December 17, 2015, and in its definitive proxy statement for its annual

meeting of stockholders filed on February 12, 2016. These documents as

well as other documents filed by CSC, Hewlett Packard Enterprise or

Spinco with the SEC can be obtained free of charge from the sources

indicated above. Other information regarding the participants in the

proxy solicitation and a description of their direct and indirect

interests, by security holdings or otherwise, will be contained in the

registration statements, prospectuses and proxy statement and other

relevant materials to be filed with the SEC when they become available.

This communication shall not constitute an offer to sell or the

solicitation of an offer to sell or the solicitation of an offer to buy

any securities, nor shall there be any sale of securities in any

jurisdiction in which such offer, solicitation or sale would be unlawful

prior to registration or qualification under the securities laws of any

such jurisdiction. No offer of securities shall be made except by means

of a prospectus meeting the requirements of Section 10 of the Securities

Act of 1933, as amended.

All statements in this press release and in all future press releases

that do not directly and exclusively relate to historical facts

constitute “forward-looking statements.” These statements

represent the Company’s intentions, plans, expectations and beliefs, and

are subject to risks, uncertainties and other factors, many of which are

outside the Company’s control. Many factors could cause actual results

to differ materially from such forward-looking statements with respect

to the transaction announced above including risks relating to the

completion of the transaction on anticipated timing, including obtaining

shareholder and regulatory approvals, anticipated tax treatment,

unforeseen liabilities, future capital expenditures, inability to

achieve expected synergies, loss of revenues, delay or business

disruption caused by difficulties in integrating the businesses of CSC

and Enterprise Services . For a written description of risk factors that

could cause actual result in CSC’s business to differ materially from

forward looking statements regarding those matters, see the section

titled “Risk Factors” in CSC’s Form 10-K for the fiscal year ended April

3, 2015 and any updating information in subsequent SEC filings. The

Company disclaims any intention or obligation to update these

forward-looking statements whether as a result of subsequent event or

otherwise, except as required by law.

By |2017-11-07T08:33:31+00:00November 18th, 2016|Categories: Training|Tags: , , , , , , , , |Comments Off on CSC Announces Merger with Enterprise Services Segment of Hewlett Packard Enterprise to Create Global IT Services Leader | Business Wire

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