If French solution provider Atos consummates its proposed acquisition of DXC Technology, the combined entity would be the second-largest global IT services vendor, according to a new report today.
The combined company would be closer in size to Accenture and larger than India’s Tata Consultancy Services and IBM Services after the latter’s spin-off of its managed infrastructure services business that’s expected by year’s end, according to Technology Business Research (TBR), an IT, telecom and professional services advisory company based in Hampton, N.H.
“With DXC Technology, Atos would gain scale in the U.S., something the company has been pursuing in fits and starts over the last five years, often through acquisitions as well as changes in leadership in North America,” TBR said in a report today. “Atos could leverage skills in transforming ailing companies such as Siemens IT Solutions and Services and Xerox’s ITO (IT outsourcing) business to swallow a larger competitor that has declining revenues and negative profit margin, particularly given Atos’ experience in successful integrations. Atos would directly benefit from the market consolidation of a direct competitor, while DXC Technology, which has historically prioritized its fiduciary responsibility, would seize the chance for its shareholders to capitalize on the opportunity and end its seemingly perennial turnaround efforts.”
Shares of the troubled, debt-saddled DXC saw a big boost yesterday on news of the unsolicited overture by Atos, with the gains making it one of the biggest moving U.S. stocks.