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DXC Update

08 January 2021 by jbchevrel

DXC Technology Co. (CSC) provides technology consulting, outsourcing and support services. It provides technology solutions that help clients address challenges and accelerates clients’ digital transformations. Today DXC CDS was by far the best performer among CDX constituents. The 5-year spread tightened -32bp at our close, after opening -50bp or so in early session. This is as it was reported that Atos SE [French technology services provider] is looking at acquisition targets in the US in order to expand in areas including cybersecurity. Thus, Atos has been evaluating companies including DXC Technology Co. and SecureWorks Corp. This is early days and these deliberations may not lead to any transaction, but CDX credit rallied and Atos sold off. In credit space, the Atos 2024s fell -2pt and in equity space, Atos SE shares fell 6% in Paris trading. That gives Atos a valuation of less than E8B. Reuters reported that Atos made an approach to DXC about a potential takeover valuing the company at more than $10B [DXC had a market capitalization of about $6.7B as of Wednesday’s close]. DXC also has $13.5B debt, making the entreprise value north of $23.5B [high vs Atos’ own size] if the deal was to be made. Elsewhere it was a relatively firm session, with equities still dragging credit tighter, although outperforming credit notably in this first trading week of the year.