Monday, 10 March 2014

CSC takeover reports

“The fly on the wall” reports that.......

“Shares of CSC have been volatile after Danish newspaper Borsen reported (on March 7) that the information technology company is in talks regarding a potential takeover with an Indian IT company. CSC declined to comment on the story, which noted the takeover could be for all or parts of CSC, Borsen added. Shares of CSC are up 55c to $63.13 after rallying over $64.00 shortly after the opening.”

Before the departure of Van B Honeycutt from his position as President and CEO in 2006, it was rumored that CSC’s Board had turned down offers of US$60 per share for the company; that they were looking at get at least US$65.   The company’s performance, outlook and share price subsequently collapsed during the tenure of Honeycutt’s successor, Michael W Laphen.  

If current CEO Michael Lawrie can get above US$65 per share for the sale of CSC, he will be viewed as a hero by many long-term shareholders, who will not care how many tens or hundreds of millions of dollars he will pocket for this achievement. They will just recall the dark days around the time of Laphen’s departure with the share price dipping below US$25.
Of course, it will be a totally different story for many CSC employees if the company is actually sold.   They will probably have much less to feel good about.

But a rumor does not constitute a transaction and this could turn out to be just an unsubstantiated rumor. But many people think that Michael Lawrie will find it increasingly difficult to sustain CSC’s profitability level.  If these concerns are founded, Mr Lawrie could be feeling some pressure to get a sale concluded soon.