CSC to merge with Hewlett Packard services unit

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CSC to merge with Hewlett Packard services unit
Meg Whitman, Hewlett Packard Enterprise

The CSC board of directors has approved a merger with the enterprise services arm of Hewlett Packard Enterprise to create a merged group with annual revenues of US$26 billion and more than 5,000 clients in 70 countries.  

HPE shareholders will control 50 percent of the combined entity, with the remainder to be held by CSC's investors under the proposal, which is still subject to shareholder and regulatory approval.

The deal is expected to deliver approximately US$8.5 billion (A$12.5 billion) to HPE’s shareholders on an after-tax basis. 

The new company's board will be split 50/50 between directors nominated by HPE and CSC. Mike Lawrie, the current head of CSC, will become chairman, president and CEO of the new company, while HPE chief executive Meg Whitman will join the board of directors.  

CSC's current chief financial officer, Paul Saleh, will continue in that role in the new company after the transaction closes, expected to be March next year.

Following the spinoff, HPE will focus on software-defined infrastructure and servers, storage, networking, and converged infrastructure, as well as its Helion Cloud platform and software assets. 

The deal will unwind HP's US$14 billion acquisition of the IT services firm EDS in 2008 under then chief executive Mark Hurd.

"Together, CSC and HPE's Enterprise Services will have the scale, foundation and next-generation technologies to innovate, compete and grow in a rapidly changing marketplace," Lawrie said in a statement. 

Meanwhile, CSC is splitting its commercial information technology division - the business that will merge with the HPE unit - from its government arm, which will remain independent

Late last year, it acquired Australian IT services provider UXC Limited for $428 million

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