DXC Technologies seeks to sell certain specific businesses that generate approximately $ 500 million in annual revenue. The asking price for unloved assets: $ 500 million. A target valuation based on annual EBITDA multiples was not disclosed.
Those factoids emerged in a revenue call by DXC Technologies on February 2, 2022. Describing the cost-optimization effort, CEO Mike Salvino said:
“We have identified businesses with approximately $ 500 million in revenues that are not strategic and will not help us grow. Selling these businesses will improve our organic revenue growth and our overall margin. We look forward to it. that the sale of these businesses will result in an additional $ 500 million in proceeds over the next 12 months. ”
DXC’s annual revenue is approximately $ 17.73 billion for fiscal year 2021. So the potential $ 500 million asset sale represents only about 3 percent of the company’s annual revenue. Salvino did not describe which specific pieces of DXC’s business portfolio are being sold, nor did he mention potential suitors for the assets.
DXC: Past Asset Sales
DXC is no stranger to asset sales. Previous steps include selling: In fact, DXC Technology has sold these businesses since 2020:
DXC Pursues Organic Growth Instead of Acquisition
Meanwhile, DXC is committed to building a solid foundation “and we still have work to do,” CEO Salvino. Instead of making acquisitions, the best use for cash over the next 12 months is to return it to shareholders, he insisted. However, Salvino left the M&A door slightly pitying in case the right deal came along. “We never say never,” he said.
DXC’s overall business remains in turnaround mode. Revenues were $ 4.09 billion for Q3 FY22, down 4.6% compared to the corresponding quarter last year.
Key growth opportunities include: A push by Platform X, aligned with ServiceNow, to ensure DXC identifies, prevents and addresses issues before they impact customers ’cloud and on-premise IT systems, it asserted by Salvino.
However, DXC faces intense market competition for ServiceNow -related platforms and IT services. Meaning: ServiceNow is a top five technology partner for each of the top 10 global IT consulting businesses, CEO of ServiceNow Bill McDermott said in a revenue call in January 2022.