What makes DXC look like a buyout candidate? First, it’s fundamentally inexpensive, trading at an EV/EBIT multiple of 8.2x. That valuation is paired with the powerful 18.6% free-cash-flow yield, suggesting the market is pricing in a lot of gloom for a business that still generates substantial cash. Second, the balance sheet is clean. With a net-debt-to-EBITDA ratio of just 1.5x, an acquirer wouldn’t need to take on a mountain of debt to get a deal done. The prize for a buyer would be the company’s two primary divisions, Global Business Services (GBS) and Global Infrastructure Services (GIS), which together represent a large, embedded base of enterprise customers.
4 replies (most recent on top)
@gs not for the employees in insurance
Insurance is the cash cow
Oh and also... Dxc is the actual text book example of how that sort of thing goes sideways and sinks both half of the ship.
We literally wrote that lesson in business history.
But it's a declining market and the figures demonstrate the run off quite nicely.
It's not at all attractive unless you are another service provider and want some contracts... But you are facing the same challenges as dxc AND the restructuring costs (basically merging and firing dxc people) is not exactly a small cost either.
No, it's not an attractive option which is why it's not happened yet.