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CSC ruins Capita bid for Xchanging with tasty last minute offer

CSC's stealth cash bid for Xchanging pulls rug out from under Capita

CSC has successfully made a last minute cash bid for Xchanging, knocking the seemingly preferred bidder Capita right out of the picture.

The rival suitor made a late takeover offer of 190p-per-share, leaving Capita’s 160p bid looking positively lacklustre. The new offer values the insurance support services firm at £480m.

After more than a month of work between Xchanging and Capita, CSC made its offer on the final day allowed under Takeover Panel rules.

"CSC leads clients on their digital transformation journeys,” said Mike Lawrie, CSC’s president and CEO. “Xchanging’s capabilities and experience in the commercial insurance market would complement CSC’s global insurance presence in software, outsourcing and services. I look forward to welcoming Xchanging to the CSC family as we continue to grow our insurance business and invest in our differentiated next-generation solutions.”

Last night, Capita said that it had no plans to compete with the offer.

“Capita confirms that it does not intend to revise its cash offer of 160 pence for each share in Xchanging,” it said in a document published via the Regulatory News Service.

“Capita continues to believe in the strategic logic and potential benefits of its Offer for Xchanging. However, Capita assesses many acquisition and organic investment opportunities and applies strict financial discipline to these assessments.”

Xchanging will offer CSC a modernised suite of insurance platforms, which are already being used by a range of large insurers, managing agents and brokers. In addition, CSC believes that it will be able to leverage Xchanging’s reach in areas such as wealth management outsourcing services, infrastructure and applications.

While CSC’s stealthy ninja bid looks to have secured the deal, there is still the potential for it to be interrupted. Ebix, a third potential bidder, was granted more time by the Takeover Panel to finalise its own offer. Ebix’s initial offer was 175p-per-share, which beat out CSC’s opening bid by five pence. Ebix now has 53 days to decide if it is going to play hardball; however, CSC has reportedly objected to the timeframe, and has asked for a meeting with the Takeover Panel.

In November, CSC split up its commercial and public sector businesses. Its public sector business was merged with SRA to form CSRA. In the lead up to the split, CSC was slurping up companies to bolster its offerings.

The Virginia-based company recently offered AU$428m (£200m) for Australian services giant UXC. The two companies have agreed a five-week due diligence period, but for all intents and purposes, it looks to be a done deal.

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