Computer Science makes $720-mn rival bid for UK insurance services firm Xchanging
10 December 2015
US technology services giant Computer Science Corp has tabled a £480-million ($720-million) cash offer for British insurance services provider Xchanigng Plc, trumping a rival offer from UK-based rival Capita Plc.
With its offer, which was submitted on the final day, allowed under the UK takeover rules, CSC, like Capita, aims to expand its global reach in insurance services, through Xchanging's modernised and well-established suit of platforms, including its Xuber software business.
Under the terms, CSC would acquire Xchanging at a price of £1.90 per share, representing an 8-per cent premium over the stock's closing price on Friday, which is 19 per cent higher than Capita's 1.60 per share offer.
Further to the announcement of the deal, shares in Xchanging surged 10 per cent to close at 193.74 pence yesterday in London.
London-based Xchanging is a provider of technology-enabled business processing, particularly in the insurance and financial sector in 42 countries. Its insurance services include processing policies and premiums as well as handling claims for customers which include large insurers, agents and brokers.
The acquisition will combine CSC's global scope in insurance, business process outsourcing (BPO) and IT services with Xchanging's specific expertise in the insurance industry, and is expected to result in cost savings, CSC said in a statement.
CSC's president and CEO Mike Lawrie said: ''Xchanging's capabilities and experience in the commercial insurance market would complement CSC's global insurance presence in software, outsourcing and services.''
CSC will also benefit from Xchanging's other areas, such as wealth management outsourcing and infrastructure and applications.
It is believed that CSC has obtained the backing from investors representing about 47 per cent of Xchanging stock in respect of the transaction.
The deal is expected to close by June 2016, subject to regulatory approvals and customary closing conditions.
US insurance software provider Ebix Inc, which had tabled a 175 pence proposal, is still believed to be in the fray, although Capita is not inclined to revise its bid.
Virginia-based CSC ranks among the largest outsourcing companies in the world and provides innovative next-generation technology solutions to leading commercial and international public sector organisations in over 70 countries across the globe. The company's annual revenue is over $12 billion and it has a workforce of around 74,000.
Recently, CSC has been on the lookout for technology firms to expand its global reach. A fortnight ago, the company agreed to buy Australian IT services major UXC Ltd for approximately $308 million for gaining a strong footing in the Asia-Pacific region. (See: Computer Science to buy Australia's UXC for A$428 mn).
Goldman Sachs & Co is acting as financial advisor to CSC on the transaction.