Multinational BPO and IT services company DXC Technology has confirmed that it is in contact with a “financial backer” who is interested in buying the business, amid indications that Baring Private Equity Asia is the suitor.
DXC Technology was created in 2017 when CSC and Hewlett Packard Enterprise merged, but the combined scale failed to stop business shrinking as customers moved to the cloud.
The embattled provider of outsourcing, consultancy and infrastructure services was understood to have hired advisers last month following an expression of interest in the company. It was understood that at least one private equity specialist was involved.
DXC, which previously declined to comment on the moves, has now gone public, saying that “a financial backer has approached management regarding a possible acquisition of the company.”
“Management remains focused on the company’s transformation journey. In accordance with its fiduciary responsibility to maximize shareholder value, the company is engaged in preliminary discussions.”
No formal offer has been received to date, DXC said, and “there is no guarantee that the board of directors will receive or determine that any proposal is suitable.” No further comment will be made until DXC “deems further disclosure to be appropriate or required.”
According to a report from Bloomberg, DXC is in talks with Baring PE, which has raised $11.2 billion in capital to invest. The brokerage house was bought by EQT Partners in March for $7.5 billion. It currently has 45 portfolio companies across Asia with more than 300,000 employees and sales of around $41 billion.
Since its inception five years ago, DXC has shrunk from a $24.55 billion business in fiscal 2018 to $16.26 billion in fiscal 2022.
The reason for this drop in billing is customers moving to the cloud and signing fewer costly outsourcing deals with traditional infrastructure service providers. DXC is not alone in this regard, with IBM divesting itself of its related business, Kyndryl, last year and Atos now forced to restructure.
Atos, which was briefly interested in buying DXC last year, was approached by ambitious rival Onepoint last week but rebuffed such advances.
Atos is being split in two by senior management with digital, big data and security divisions to be funneled into a new publicly traded entity called Evidian, with the remaining units, which are not growing, including hosting, data center , BPO, unified communications and digital workplace to be built on Tech Foundation Co. ®