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 -0.61%).
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.
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.
