Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why DXC Stock Popped Today

By Evan Niu, CFA - Jan 7, 2021 at 12:44PM

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 IT consulting company confirms that it has received an unsolicited buyout offer.

What happened

Shares of DXC Technology ( DXC -3.32% ) popped as much as 12% today after the company confirmed that it had received an unsolicited takeover offer from Atos, a French multinational IT consulting company. Reuters had reported on the deal this morning, and the companies have both confirmed the offer. As of 12:10 p.m. EST, DXC shares were up 7%.

So what

DXC said that it had received an "unsolicited, preliminary and non-binding proposal" from Atos last night to acquire all of DXC's outstanding shares. Prior to receiving the proposal, DXC's board had no idea that Atos was interested in an acquisition. Atos also confirmed its interest, suggesting that a friendly transaction could create a leader in digital services with global scale.

Green stock chart going up

Image source: Getty Images.

No financial terms regarding the offer were disclosed, but the Reuters report suggested that the deal would be more than $10 billion when including debt. DXC's current market cap is $7 billion, and the tech company has been working to reduce its debt load.

Now what

The acquisition would be Atos' largest purchase to date if it goes through. Atos investors seem skeptical, sending shares down 13% on the Paris Stock Exchange. Buying DXC would allow Atos to expand significantly in the U.S. Atos has been quite acquisitive in recent years and reportedly believes that the purchase would generate meaningful cost savings and other synergies.

Both companies warn that there is no certainty that a deal will be finalized. DXC's board will now evaluate the proposal.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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

DXC Technology Stock Quote
DXC Technology
DXC
$29.99 (-3.32%) $-1.03

*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 service.

Stock Advisor Returns
673%
 
S&P 500 Returns
142%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/01/2021.

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

Our Most Popular Articles

Premium Investing Services

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