Computer Sciences Corporation (NYSE:CSC) announced a milestone in the planned spin-off of its U.S. public sector business into a separate, publicly traded company with the filing of an initial Form 10 Registration Statement (Form 10) with the U.S. Securities and Exchange Commission.
The intent to separate CSC into two companies – one to serve public sector clients in the U.S. and one to serve commercial and government clients globally – was announced on May 19. The spin-off of the public sector business will be effected through a one-for-one distribution of the new entity’s stock to CSC shareholders, and will include a special dividend of $10.50 per share at closing.
“Today’s filing is an important step in the separation of CSC into two pure-play companies,” said CSC CEO Mike Lawrie. “Each will be uniquely positioned for growth and leadership in their sectors, and to drive value for customers and shareholders.
“We have made solid progress in our process so far and remain on track to complete the transaction in the next several months.”
The U.S. public sector company, consisting largely of CSC’s North American Public Sector (NPS) business, will be a top three provider of mission-specific IT, infrastructure and business services to U.S. federal, state and defense agencies. Upon separation, it will take the name Computer Sciences Government Services, Inc. (Computer Sciences GS), reflecting both the focus of the new company and the Computer Sciences Corporation heritage.
Lawrence B. Prior III, currently executive vice president and general manager of NPS, is expected to serve as the president and chief executive officer of Computer Sciences GS, pending approval of the new company’s board of directors. Prior has more than 30 years of public and private sector experience, with an extensive background in intelligence, security, technology and defense initiatives.
The commercial business – which will keep the CSC name and brand after the separation – will move forward as the trusted information technology (IT) services and solutions partner for Fortune 1,000 companies and non-U.S. government clients, leveraging its industry, infrastructure and consulting expertise to lead customers on their digital transformation journey. (Original Source)
Shares of Computer Sciences closed today at $67.37, up $0.63 or 0.94%. CSC has a 1-year high of $73.29 and a 1-year low of $54.23. The stock’s 50-day moving average is $67.10 and its 200-day moving average is $65.63.
On the ratings front, Computer Sciences has been the subject of a number of recent research reports. In a report issued on May 20, Morgan Stanley analyst Brian Essex upgraded CSC to Hold, with a price target of $73, which implies an upside of 9.0% from current levels. Separately, on the same day, Cowen’s Moshe Katri maintained a Buy rating on the stock and has a price target of $75.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Brian Essex and Moshe Katri have a total average return of -13.4% and 15.7% respectively. Essex has a success rate of 20.0% and is ranked #3265 out of 3694 analysts, while Katri has a success rate of 88.2% and is ranked #809.
Overall, 3 research analysts have assigned a Hold rating and one research analyst has given a a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $72.33 which is 8.0% above where the stock opened today.
Computer Sciences Corp provides information technology (IT) and professional services and solutions. The Company’s reportable segments are Global Business Services (GBS), Global Infrastructure Services (GIS), and North American Public Sector (NPS).