H-P, Blackstone Mulling Bid for CSC

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Shares of Computer Sciences Corp. jumped more than 9 percent after the Wall Street Journal reported that Blackstone Group and Hewlett-Packard Co. are exploring a possible buyout of the El Segundo-based computer services company.


The discussions were preliminary and could break down on a number of issues ranging from price to ownership structure, the newspaper said.


Under the plan, H-P would at first own a minority stake in CSC, but that the computer maker could buy out Blackstone and other private-equity owners at a later date.


The Journal said it is unclear what Blackstone and H-P would pay for CSC, but that the company had hoped to attract an offer of $65 a share, which would amount to about $12 billion.


That price had been offered in late October by potential buyers including Lockheed Martin Corp. and three private equity firms. The Journal had reported that those talks ended because Computer Sciences didn’t want to be divided into two pieces.


Computer Sciences was reported to have wanted to sell itself in one piece to Lockheed, which then would keep CSC’s defense-contracting business and sell the rest to Warburg Pincus, Texas Pacific Group and Blackstone Group. Lockheed, worried about taking on the added risk of completing the second deal, wanted to break CSC into two pieces that would be sold simultaneously, the Journal said. CSC apparently balked at the idea.


Shares of CSC rose 7.9 percent to settle at $54.81 on Thursday.

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