Computer Science to buy Australia’s UXC for A$428 mn

US technology services giant Computer Sciences Corp (CSC) has struck a deal to acquire Australia's largest independent IT services company UXC Ltd for approximately A$428 million ($308 million) in an all-cash deal, to significantly bulk up its operations in the Asia-Pacific region.

The binding agreement between the two companies brings an end to the due diligence which commenced last month when CSC's initial offer for UXC was disclosed.

Melbourne-based UXC, founded in 2002, is a regional leader in implementation of enterprise applications including Microsoft Dynamics, SAP, Oracle and ServiceNow.

The company's annual revenue is around A$686 million and it has nearly 3,000 employees.

CSC will pay A$1.22 per share for all the 345 million outstanding shares of UXC, while UXC will pay a dividend of A$0.02 per share for the first half year ending 31 December 2015.

The total cash payment of A$1.24 per share represents an 8-per cent premium to UXC stock's closing price on 20 November, and a 29-per cent premium to the share's 120-day volume weighted average price on 5 October when CSC's initial offer was revealed.

''CSC's president and CEO Mike Lawrie said in a statement, ''The addition of UXC would continue the process of rebalancing our offering portfolio and strengthening our global commercial business.''

''UXC's application platform capabilities – combined with CSC's existing strengths in cloud, cyber, and big data – would enhance what the two companies already deliver to clients in the region,'' he added.

The UXC board has recommended the deal to its shareholders, in the absence of a superior proposal.

''The board believes that the proposal received from CSC represents an opportunity for UXC shareholders to crystalise the value of their holdings in a timeframe that would not otherwise be available," UXC chairman Geoff Cosgriff said.

The transaction is expected to close in February 2016, subject to approvals from UXC shareholders as well as relevant regulatory authorities.

UXC will significantly bulk up CSC's already sizeable presence in the region. It advises companies on the selection, implementation and use of numerous enterprise technology systems and application including Microsoft Dynamics, SAP, Oracle and ServiceNow.

''A combined CSC-UXC would be among the region's largest IT service companies, based on revenues. The combination would offer an expanded client base and deeper industry expertise for both firms,'' CSC said.

Virginia-based CSC ranks among the largest outsourcing companies in the world and provides innovative next-generation technology solutions to leading commercial and international public sector organisations in over 70 countries across the globe. The company's annual revenue is over $12 billion and it has a workforce of around 74,000.

During due appraisal, the companies acknowledged that expected synergies as a result of the combination may take longer than anticipated, and CSC required a higher working capital position than it initially envisaged due to differences in accounting standards.

Bank of America Merrill Lynch acted as advisor to CSC in the transaction, while UXC was advised by Nomura.