Atos moving towards $10 billion takeover of DXC

French IT consultancy group hopes to expand its presence in the US market

Atos is gearing up to acquire US-based IT services provider DXC Technology.

The French IT consulting group is said to have approached DXC with a deal worth over $10 billion (£7.37bn), according to Reuters.

Two sources with knowledge of the matter told the publication that a formal offer had been made earlier this week.

Atos confirmed the rumours of the bid, stating that it had "approached DXC Technology concerning a potential friendly transaction between the two groups in order to create a Digital Services Leader".

However, the company also said that "there can be no certainty at this stage that this approach will result in any agreement or transaction", adding that a "further announcement will be made when appropriate".

If DXC agreed to the takeover, the merger would help promote Atos’ presence in the US and provide the French company with a variety of B2B offerings ranging from analytics and cloud applications to IT outsourcing services.

DXC is known for assisting global firms with the smooth running of mission-critical systems and operations, with DreamWorks Animation, Aviva, and the NHS among some of its prominent customers. Headquartered in Virginia, it also provides support for digital transformation projects as well as providing security and scale-up services across several types of cloud environment.

DXC Technology was founded in 2017 as a result of a merger between CSC and HPE's Enterprise Services division. At the time the company boasted revenues of $25 billion (£18.4bn), employing 170,000 people across 70 countries.

However, since then, DXC’s revenues have dropped to $19.58 billion (£14.4bn), with staff count falling by 32,000. Last year, the company’s debt also rose to $9.9 billion (£7.3bn), from $7.4 billion (£5.45bn) in 2019.

One source told Reuters that “DXC is too small to operate on its own in a low margin world”.

The company attracted headlines in July when it confirmed that one of its subsidiaries, Xchanging, had fallen victim to a ransomware attack.

Headquartered in London, Xchanging is a business process and technology services provider and systems integrator, with customers exclusively in the insurance sector.

Atos, meanwhile, is engaged in an acquisition spree, recently buying AI and data science provider Miner & Kasch as well as cloud consulting group Maven Wave. In 2019, it also took over cyber security company IDnomic and energy specialist X-Perion, following the acquisition of Syntel in 2018.

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