DXC Technology, the NYSE-listed IT services company, has agreed to buy Switzerland-headquartered Luxoft for $59.00 per share in cash in a deal worth $2 billion. The news left traders holding the short end of that stick with fingers burning: Luxoft (also NYSE-listed) soared 82 percent to $31.70 on the news. DXC fell.
Luxoft, which has 280 active clients, including in the financial services and automotive sectors, describes itself as an “end-to-end digital solutions” consultancy. The company employs 12,900 people around the world. Its services span product engineering, automation, performance testing, API management and more.
The company had faced market headwinds despite strong revenue growth, amid falling margins and mixed attempts to push into new industry verticals.
See also: Defra Hands DXC £81 Million Contract
Among its recent projects: working with Amazon to integrate Alexa into vehicles (a strong automotive sector presence was among the attractions of the deal), and piloting blockchain-based voting in its hometown of Zug, where it last year ran a pilot of the project with the Lucerne University of Applied Sciences (perhaps less of a hot sell).
Blockchain is one of the trends for this year.
Describing Luxoft and DXC as “highly complementary” DXC CEO Mike Lawrie in a statement Monday said: “Luxoft has a proven track record and expertise in producing measurable business outcomes at-scale for global clients across key industries, including automotive and financial services.
He added: “The addition of Luxoft accelerates DXC’s growth strategy as we equip the company to meet the digital requirements of our clients today and in the future.”
DXC Luxoft Deal will Add Industry Verticals, Strong Revenues, Skilled Workforce
Luxoft will maintain its brand and operate as “A DXC Technology Company,” whilst continuing to be led by Dmitry Loschinin, the company’s current president and CEO, who will report to Mike Lawrie, chairman, president, and CEO of DXC Technology.
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Luxoft achieved $911 million in revenue over the last four reported quarters, with a strong, double-digit compound annual growth rate (CAGR) over the last three years. The combined company will serve half of the top financial institutions in the Americas and Europe.
DXC said Luxoft offers “differentiated digital capabilities in areas such as analytics, UX/UI, IoT and blockchain, and is a significant player in outsourced engineering services, cloud and devops”, also pointing to its highly skilled workforce.
The deal is expected to close in June 2019. Shareholders representing approximately 83 percent of the total voting power of Luxoft have delivered written consent in support of the transaction, so the requisite Luxoft shareholder approval has been obtained.
