CSC completes AU$427.6m UXC transaction

CSC has completed its AU$427.6 million acquisition of UXC Limited, with Wednesday marking the first day for UXC under its new parent organisation.
Written by Asha Barbaschow, Contributor

Computer Sciences Corp (CSC) has completed its AU$427.6 million acquisition of UXC Limited, and is already looking towards harvesting Australian talent with an innovation centre set to launch in May.

Speaking on Tuesday, CSC managing director Seelan Nayagam said the acquisition was just the start of growth for the combined companies, with UXC and CSC forming one of the largest IT services company in the ANZ region, boasting a 6,000 people-strong workforce.

"As one of the largest IT services companies in our region, we have the breadth and depth to serve Australia's great innovating companies and governments on their digital transformation," he said. "We are a major employer in our region and are dedicated to supporting our economic growth.

"We are committed to growth with 75 graduates choosing CSC as a launching pad for their careers. They will have the opportunity to work with our global partners through our world scale SAP, Microsoft, ServiceNow, and Oracle partners."

Speaking of the New South Wales government's Data Analytics Centre opened late last year by Minister for Innovation and Better Regulation Victor Dominello, Nayagam said he is delighted to see the state government embrace technology.

"The government's drive for innovation will support both jobs and economic growth for NSW, and I am delighted to see it embrace technology as part of that effort," Nayagam said. "CSC and UXC share this vision. Innovation and digital transformation is our business."

"The minister has a big push around innovation and we wanted to create an environment where you control, in terms of the technology evolution towards the digital era -- and I don't want to give too much away, but when we come back in eight weeks' time you can then see the innovation centre and what we're going to have."

Dominello was asked if his upcoming innovation policy can be expected to partner with CSC's innovation centre.

"These guys move much faster than government," he said. "We'd like to get the policy out within about two months so all things being equal, it will probably end up being May."

Showing more facial hair each time he makes a public appearance, Dominello said he was excited to see the opportunities for students moving into the IT workforce, and was also encouraged by the UXC-CSC organisation providing so many jobs for Australians.

"If there's any portfolio I'm allowed to grow a beard, it's the innovation portfolio," he said.

"Look, we all know about the construction sector, we all know about the banking and finance sector, we all know about the agricultural sector, and the mining, but this to be honest, is the sexiest sector. This is where it's really exciting, really dynamic, where there's change all the time."

Cris Nicolli, managing director of UXC, said that the acquisition would give the company the resources it needed to grow.

"As much as customers loved working with UXC, they stretched us more and more," Nicolli said. "I think there's just a mass amount we can achieve now."

"We're growing up; we've gone from being a young infant into a good teenager, probably now at a young adult stage, and that next step of growth was always going to be very hard for UXC if it wanted to grow with its customers."

Nicolli said that UXC will announce a major contract with a NSW government entity in the near future.

Nicolli will also be retiring from his position following a 12-year tenure with the firm, which included five years in the CEO position.

From an overall perspective, both Nicolli and Nayagam said they do not expect staff numbers to change.

"CSC is primarily operating in the big enterprises and in the public sector with both federal and state; UXC look after the medium to smaller clients but are still very strong in state government," Nayagam said.

"We are blending both structures together so we'll maintain our industry strength, which primarily focuses on the large enterprises, and we will maintain the UXC practise structure."

At the close of trading on Monday, UXC was officially removed from the Australian Securities Exchange after the Supreme Court of Victoria gave the green light to the acquisition last month, with court orders lodged with the Australian Securities and Investments Commission a few days later.

Initially, CSC proposed to pay AU$1.26 per share with a fully franked dividend of AU$0.02 cash per share, with the amount recalculated based on US GAAP and Australian accounting standards, resulting in CSC proposing to pay AU$1.22 per share with no change to the dividend for the half year ending December 31.

Based on 345 million UXC shares, the total value of the transaction was approximately AU$427.6 million upon completion.

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