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CSC and HP’s services division merging, joint sales could hit $26bn a year

Both entities will take an equal stake in the new business

CSC and HP’s enterprise services arm are merging, creating an IT services company with sales estimated to be worth approximately $26bn a year, while providing billions in operational cost savings.

The US giants have seen major operational and structural changes over the last few years, with both breaking up their businesses into smaller chunks more suited to a sell-off, merger or spin-off.

The deal, expected to be complete in March 2017, will see CSC and Hewlett-Packard Enterprise (HPE) shareholders take an equal share in the new business, which will have more than 5,000 enterprise customers.

CSC CEO, Mike Lawrie, will become CEO of the new company and HPE CEO, Meg Whitman, will join a board of directors, split equally between CSC and HPE nominees.

“Our proposed merger with HPE Enterprise Services is a logical next step in CSC’s transformation,” said Lawrie. “The new company will be well positioned to innovate, compete and serve clients.”

Whitman added: “The spin-merger of HPE Enterprise Services with CSC is the right next step for HPE and our customers.”

HP has struggled recently in IT services. In 2008, when it paid $13.9bn for IT outsourcing pioneer EDS, heads turned. The same happened a few years later when the value of this acquisition was reduced by almost $9bn.

In November last year HP split into two separate companies, the printing and devices business HP Inc, and enterprise-focused organisation HPE.

CSC has also faced challenges and in May 2015 it split its business, forming CSC US Public Sector and CSC Global Commercial, with the latter focusing on enterprise and non-US public sector sales. 

This move was seen as a strategy to make the company easier to digest for any potential purchaser, or easier to manage during a merger.

Read more about HP and CSC services businesses

  • CSC is splitting itself in two to make its sale easier, say sources, with Indian supplier Wipro touted as a potential buyer.
  • HP has decided to split the company in two, with its consumer computing and printing departments separated from its software, business servers and IT services operations.
  • HP is two months away from splitting the company into HP Enterprises and HP Inc.

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