Computer Sciences Corporation (CSC), of Falls Church, Va., announced May 19 that its Board of Directors has unanimously approved a plan to separate the company into two publicly traded companies: one to serve commercial and government clients globally and one to serve public sector clients in the U.S.
Concurrent with the separation, CSC intends to pay a cash dividend to shareholders of $10.50 per share at closing, which is expected by October 2015.
“CSC began its turnaround three years ago,” CSC CEO Mike Lawrie said. “That turnaround has progressed strongly, and our focus now turns to positioning the business for long-term growth and leadership. The best way to accelerate that transformation is by separating the company into two businesses, each uniquely positioned to lead its market by focusing strongly on the needs of its clients.”
CSC – Global Commercial will be an information technology (IT) services and solutions partner for Fortune 1,000 companies and non-U.S. government clients. CSC – U.S. Public Sector will provide mission-specific IT, infrastructure and business services to U.S. federal, state and defense agencies.
The separation will allow both companies to better optimize their capital strategies and cost structures, and will provide investors with distinct long-term investment opportunities.
“Our analysis shows significant benefits of going with a pure-play strategy,” Lawrie said. “We expect this change to enable both businesses to enhance innovation and improve delivery, in ways that are consistent with the rate and pace of the markets they serve.”
“During the first three years of CSC’s turnaround, we benefitted from taking a unified approach,” Lawrie said. “The progress we’ve made, coupled with the changing demands of the market, make this a good time to give these two businesses room to thrive as independent companies, able to move decisively to capture the opportunities in front of them.”
RBC Capital Markets is serving as financial advisor to CSC. Additional financial advice is provided to CSC by Guggenheim Partners. Allen & Overy LLP is serving as legal advisor.