Report: CSC Set To Split In Two

Systems integration giant CSC plans to announce it will split in two, Reuters is reporting, separating the commercial and government businesses, as soon as its earnings call Tuesday.

The Reuters report, citing unnamed sources, states that the $12.6 billion solution provider has come to the decision to split after several attempts to sell itself over several years, but now sees a split as the best option, though it is still open to a buyout. CSC is No. 4 on CRN's 2014 Solution Provider 500 list.

[Related: The Good The Bad And The Ugly: CEO Mike Lawrie Faces Challenge Of Transforming CSC]

CSC shares closed Thursday up $2.77, or 4 percent, to $67.28 in response to the news.

CSC declined to comment.

John Caucis, practice manager and senior analyst at Technology Business Research, said the news doesn't come as a surprise, as rumors of the company's split or acquisition have been swirling for years. "I guess it's finally going to happen," he said.

While the company has struggled in the federal space, most notably with the troubles and hefty losses it has seen with the United Kingdom's National Health Services organization, Caucis said the move could allow CSC to drive independent focus on its commercial and public sector businesses.

"This may not be a decision rooted in the struggles in the public sector as it is a decision on the corporate level to focus on commercial business and avoid the distraction of running both businesses," Caucis said. "This is being done so CSC can focus more exclusively on the commercial sector and allow whatever the spun-off business of [North American Public Sector], allow them to focus exclusively on their niche market."

In late February, Reuters reported that CSC, which has a market value of $9.49 billion, was being pursued for a sale to private equity firm Carlyle Group and fellow solution provider behemoth Capgemini. A sale of CSC would have been the largest leveraged buyout since Dell went private for $16 billion in 2013.

The same February report said the buyout talks fizzled after they first started late last year and it was not clear when, or if, the talks would continue. The report said CSC was working with the Royal Bank of Canada to review its options.

PUBLISHED MAY 14, 2015