Computer Sciences to buy UK's Xchanging for 480 million pounds
By Esha Vaish
(Reuters) - British outsourcing company Xchanging Plc agreed to be bought by Computer Sciences Corp (CSC) for about 480 million pounds after the U.S. technology consulting company topped an offer from Capita Plc.
The cash offer of 190 pence per share represents a premium of about 72 percent to Xchanging's closing price on Oct. 2, the day before the offer period commenced.
The company has been pursued by four suitors, including larger rival Capita, insurance software maker Ebix Inc and U.S.-based private equity investor Apollo Global Management LLC, which dropped out of the race last month.
However, CSC's current offer is the highest on the table. The company had earlier made an initial proposal of 170 pence per share. Falls Church, Virginia-based CSC has a market value of $4.2 billion (£2.8 billion).
Xchanging, which offers services ranging from back-office invoice processing to insurance claims settlement, said its board intended to unanimously back the CSC offer and withdraw its recommendation of a 160 pence offer from Capita.
Capita said after market close on Wednesday that it did not intend to revise its cash offer for Xchanging.
"Will someone else come through, another global insurance specialist in software and services, it's possible," Shore Capital analyst Robin Speakman said.
"But CSC's offer is probably not going to be matched by Capita and we haven't seen any further activity in the last two weeks in terms of new names."
The deal will give CSC, which has made multiple attempts to sell itself over the years, access to Xchanging's lucrative insurance business and Xuber software, which caters to the Lloyd's of London insurance market.
It would also mark CSC's largest deal since it split into two public companies this year.
"Xchanging's capabilities and experience in the commercial insurance market would complement CSC's global insurance presence in software, outsourcing and services," CSC CEO J. Michael Lawrie said.
CSC said it had received binding commitments from investors holding about 47.07 percent of Xchanging's ordinary shares as of Tuesday. The deal is expected to close in six months.
Lazard & Co Ltd, Investec Bank Plc and Liberum Capital Ltd advised Xchanging, while CSC was advised by Goldman Sachs International.
Xchanging's shares closed up 10.5 percent at 193 pence on the London Stock Exchange. Computer Sciences was up 0.3 percent at $30.54 (£20.1) on the New York Stock Exchange in afternoon trading.
(Reporting by Esha Vaish in Bengaluru; Editing by Gopakumar Warrier and Don Sebastian)
