HPE Enterprise Services segment to merge with CSC

Picture credit: Hewlett Packard Enterprise

Hewlett Packard Enterprise’s Enterprise Services segment is set to merge with CSC, creating a global IT services company, after the latter’s board of directors unanimously approved the development.

The combined entity, well-placed to help clients as regards digital transformation, is anticipated to boast revenues of $26 billion on the back of over 5,000 clients in 70 countries. The development is expected to provide first-year synergies of close to $1 billion post-close, with a run rate of $1.5 billion by the end of the first year. RBC Capital Markets is serving as financial advisor to CSC, and Allen & Overy is serving as legal advisor.

After the transaction is completed, 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 divided equally between nominees of CSC and HPE. 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.

Completion of the merger is anticipated 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% of the new company’s shares. The transaction between CSC and HPE is anticipated to provide close to $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.

Read more: Hewlett Packard Enterprise launches: A more agile, lean HP?

 

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