DXC Technology, the Virginia-based outsourcing and consulting company, has terminated discussions with a financial sponsor over a potential sale. The news comes after the company confirmed in October 2022 that it had been approached by a financial sponsor regarding a potential acquisition. Although Bloomberg News reported that Baring Private Equity Asia was the private equity sponsor, no formal proposal was received by the company, and discussions have been terminated.
Challenges in Raising Necessary Capital
DXC Technology issued a statement on Tuesday explaining that the financial sponsor had faced challenges in raising the necessary capital due to current market conditions. The company added that “no formal proposal was received by the company and DXC has terminated the discussions.” Following the news, shares in DXC Technology were down in pre-market trading on Tuesday.
DXC Technology’s shares have had a mixed performance in 2023, up by 7.5% year-to-date. Despite this, the company’s market capitalization is still relatively high at $11.3 billion. DXC Technology is a provider of end-to-end IT services and solutions for clients in various industries, including healthcare, insurance, and retail.
DXC Technology’s Future
The termination of sale discussions with a financial sponsor will undoubtedly raise questions about DXC Technology’s future. The company has been under pressure from shareholders to improve performance and has been exploring strategic alternatives, including the potential sale of the company. The news of the termination of discussions with a financial sponsor is likely to disappoint shareholders who were hoping for a sale.
The termination of sale discussions is a setback for DXC Technology, but the company’s shares have still performed well this year. The company will continue to face challenges in the competitive IT services industry, but its restructuring plan may help improve its profitability and position it for future growth.