Lockheed Martin Corp and three private-equity groups are considering an offer of about $12bn, or between $64 and $65 a share, to buy IT services company Computer Sciences Corp, according to a report in the Wall Street Journal.
The deal would represent a 25% to 27% premium over CSC’s share price of $51.25 at market close Monday October 31, 2005. CSC shares shot up more than 13% on the news to close at $58.00 on Tuesday November 1.
The negotiations between CSC, Lockheed, and the three investment groups – Texas Pacific Group, Warburg Pincus, and Blackstone Group – are still in the early stages, the Journal reported. But analysts seem to be giving a CSC buyout pretty good chances. And there’s also the likelihood that other investors or services companies could enter the game with their own rival bids.
Under the deal, Lockheed would buy CSC’s government business, which is responsible for about one-third of its overall $14.1bn in annual revenue. The three private investment groups would take control of CSC’s commercial business.
At around $12bn, the deal would surpass last year’s $11.3bn private buyout of financial software maker Sungard Data Systems, which to date remains the biggest leveraged buyout of a tech company.