Please ensure Javascript is enabled for purposes of website accessibility

Why Luxoft Holding Stock Skyrocketed 80% Today

By Steve Symington - Updated Apr 15, 2019 at 10:49AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The software development leader is being acquired. Here's what investors need to know.

What happened

Shares of Luxoft (LXFT) were up 82.2% as of 3:44 p.m. EST Monday after the software-development and technology services company announced it has agreed to be acquired by DXC Technology (DXC -0.17%).

More specifically, DXC will purchase all outstanding Luxoft shares for $59 per share in cash, good for a total equity value of roughly $2 billion, and an 86% premium from Luxoft's close at $31.70 per share on Friday.

Woman drawing a large yellow fish eating a smaller fish

Image source: Getty Images.

So what

"Luxoft and DXC are highly complementary, and our shared vision of digital transformation makes this strategic combination a great fit for both organizations -- as well as enormously beneficial for our clients," stated DXC CEO Mike Lawrie. "Luxoft has a proven track record and expertise in producing measurable business outcomes at-scale for global clients across key industries, including automotive and financial services."

To be fair, the financial services industry still accounted for more than half of Luxoft's total sales last quarter. Its two largest clients, UBS and Deutsche Bank, represented over 30% of its revenue. But the company has made undeniable progress in shifting its focus to diversify into other high-growth industries like automotive, revenue from which climbed more than 20% last quarter.

"Aligning with DXC presents an exciting opportunity to unlock new value for our people, clients and partners," added Luxoft CEO Dmitry Loschinin. "We will gain the scale, resources and market presence to better serve and compete, and to more rapidly realize our vision."

Now what

The acquisition has already received the approval of shareholders representing roughly 83% of Luxoft's voting power. So assuming all goes as planned and it also passes regulatory muster, the deal is expected to close by June 2019, after which Luxoft will maintain its brand and operate as a subsidiary of DXC.

With shares currently trading at a modest 2.4% discount to the agreed acquisition price -- and unless waiting to sell will result in more favorable long-term capital gains tax treatment on your profits -- I think Luxoft shareholders would do well to take their money and put it to work elsewhere.

Check out the latest Luxoft and DXC Technology earnings call transcripts.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Luxoft Holding, Inc. Stock Quote
Luxoft Holding, Inc.
DXC Technology Stock Quote
DXC Technology
$29.89 (-0.17%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.