CSC to remain independent as firms hover to buy it
Upside of independence outweighs temptation of buyout
- By Alysha Sideman
- Jan 03, 2011
When Joseph Vafi, an analyst at Jefferies and Co., wrote that a private equity firm could pay $8.7 billion for Computer Sciences Corp. and earn a return of more than 25 percent over five years, the investors began to circle overhead and the phones began to ring.
Its positive cash flow, low debt and plethora of government clients make CSC a prime target for a buyout firm interested in taking the computer-services provider private, reports Bloomberg Businessweek.
While large technology companies seek out new acquisition targets to expand their market presence and services, CSC is shoring up its walls to preserve its independence. CEO Mike Laphen told Bloomberg he plans to keep CSC independent because of the growth opportunities ahead and what he sees as the value of a services company that doesn’t sell its own hardware.
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CSC's strategy is to expand in developing markets, gain share in more profitable services and lessen its dependence on government contracts, according to Laphen’s interview with Bloomberg.
Addressing the slew of phone calls, none of which have led to serious talks, Vice President of Corporate Development Randy Phillips told Bloomberg: “It’s not surprising, and humorous and tiring all at the same time.”
“But we like where we are,” he added. "The board likes where we are. We like the plan."
Alysha Sideman is the online content producer for Washington Technology.