Published on the 06/10/2015 | Written by Beverley Head
US giant CSC has given itself just five weeks to complete the due diligence on Australia’s largest listed software and services business, UXC Ltd, ahead of a planned $A428 million takeover…
In an announcement this morning CSC said that it had begun exclusive negotiations to buy all the shares of UXC subject to “due diligence, board approvals and other requirements.”
CSC is offering AU$1.26 per share which would value the transaction at around AU$428 million. At time of writing UXC’s shares last traded at AU$1.33 – but they have been climbing steadily over the last few months; in June they were worth just 75 cents.
According to UXC, CSC’s offer reflects a premium of 33.3 percent to the 120 day weighted average price of the shares. But with the shares currently trading above the offer price CSC may face some shareholder pushback over the amount being offered.
UXC is Australia’s largest independent and publicly owned IT services company, with annual revenues of AU$686 million and 3,000 employees. While its footprint is largest in Australasia, it has built up a head of steam in the US where it has predicted achieving AU$100 million revenues.
The CSC deal has come out of the blue. In its annual report which was released just a fortnight ago UXC gave no indication that it might be in play.
Instead it once again reaffirmed its ambition; “To be recognised as the leading Australasian IT service provider and the number one alternative to the multinationals in the sector through the domain depth and breadth of our services, client centricity and market leading capabilities.”
If the due diligence and approvals process goes ahead without a hitch the CSC takeover should be completed by February next year and UXC’s local heritage will be obliterated.
In a statement to shareholders and the ASX, UXC said that the board had decided it was in the interests of shareholders to engage with CSC “with a view to finalising an implementation agreement to implement the proposed transaction.” The board also indicated it would vote in favour of the proposal unless there was a better offer – and also subject to an independent expert report supporting the arrangement as a good deal for shareholders.
If there is a better proposal and CSC decides not to match it, UXC will be slugged with a break fee to the US giant.
Image: CSC President & CEO Mike Lawrie source: www.csc.com
