DXC Technology rejects $10 billion Atos bid, and Atos walks away

02 February 2021 Consultancy.eu 2 min. read
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French technology giant Atos has walked away from its deal talks with DXC Technology, in a move that so far has been well received by shareholders who believed the $10 billion price overvalued its US-based rival. 

Last month, Atos rocked the stock markets and the IT world with the announcement that it has put in a bid of just over $10 billion for DXC Technology. The Paris-listed company positioned its approach as a “friendly transaction”, with the aim of creating a “digital services leader benefitting from global scale, talent and innovation.”

If the deal goes through, then it would create a powerhouse company with around 250,000 staff globally. This would bring Atos and DXC Technology significantly closer to the market leaders in the IT services industry such as Accenture (506,000 employees), Tata Consultancy Services (470,000) and Capgemini (270,000).

DXC Technology rejects $10 billion Atos bid

Having already acquired over a dozen companies in the past 1,5 years, Atos reportedly was relatively confident that a deal with DXC Technology – which would be the largest in its history, triple the size of the Syntel deal in the US – was a realistic scenario, bringing the news to the markets on January the 8th 2021. 

However, upon opening of the markets this morning, Atos confirmed that it has “unanimously determined not to pursue a potential transaction with DXC Technology.”

Atos’s major shareholders never warmed to the deal, mainly due to the expected complexity of the integration, and as a result the firm’s shares had fallen about 14% this year. At the time of writing, shares were up 5% in Paris.

Meanwhile, DXC Technology said in a statement that is has declined the bid by Atos, stating that the offer not up the standard. “The DXC board of directors carefully evaluated the proposal, together with its financial and legal advisors. The offer was determined to be inadequate and lacking certainty in light of the value the board believes DXC can create on a standalone basis by executing our transformation journey," DXC said 

The firm is scheduled to release its third quarter financial results this Thursday, and is expected to exceed guidance on metrics including revenues and adjusted EBIT margin.

"After sharing certain high-level information in order to help Atos understand why the board believes the proposal undervalued DXC, Atos and DXC today agreed to discontinue further discussions.”