CSRA Inc. (NYSE:CSRA) announced that it has completed its separation from Computer Sciences Corporation (NYSE:CSC) and is now an independent public company trading on the New York Stock Exchange (“NYSE”) under the ticker symbol “CSRA.” Additionally, CSRA completed its planned combination with SRA International, Inc. (SRA). This morning, members of the CSC and CSRA leadership teams will ring the NYSE Opening Bell® to mark the milestone.
CSRA, with 19,000 employees and pro-forma revenues of $5.5 billion, helps U.S. government customers modernize their legacy systems, protect their networks and assets, and improve the effectiveness and efficiency of mission-critical functions. CSC is a leading global IT services company with 56,000 employees in more than 60 countries. CSC leads clients on their digital transformation journeys by providing innovative, next-generation technology solutions that leverage alliance partners, proprietary intellectual property (IP) and extensive domain expertise.
“A little more than six months ago, CSC’s Board of Directors determined that two leading pure-play companies, focused exclusively on their respective customer segments, would best serve the interests of our clients, employees and other stakeholders,” said Mike Lawrie, CSC president and CEO and CSRA chairman. “The debut of CSRA and the completion of the merger with SRA accelerate our transformational goals and enable both CSC and CSRA to drive innovation and better address the demands of the markets they serve. On behalf of both Boards and leadership, I want to thank everyone who helped make today a reality.”
“By combining the former CSC and SRA businesses into CSRA, we have created the leading provider of next generation IT solutions that will really make a difference in how our government serves our country and our citizens,” said Larry Prior, chief executive officer, CSRA. “I am proud of the heritage, culture, and people of both of these great organizations and excited about moving forward together as a single, stronger company dedicated to supporting the important missions of our customers.”
Completion of Separation
Under the terms of the separation agreements, on November 27, 2015, stockholders who held CSC common stock at the close of business on November 18, 2015 (the “Record Date”), received a distribution of one CSRA common share for every one share of CSC common stock held as of the Record Date.
Since November 16, 2015, CSRA shares have traded on a “when issued” basis on the NYSE under the symbol “CSRA WI,” permitting investors to trade the right to receive CSRA shares in the distribution. “When issued” trading of CSRA common shares ended at the close of the market on November 27, 2015. Starting today, the “regular way” trading of CSRA common stock on the NYSE will commence under the symbol “CSRA.”
Payment of Special Dividend
Today CSC and CSRA each paid concurrent special cash dividends which in the aggregate totaled $10.50 per share. Of that $10.50 per share dividend, $2.25 was paid by CSC and $8.25 was paid by CSRA. Payment of each portion of the special dividend was made to holders of CSC common stock on the Record Date who received shares of CSRA common stock in the distribution.
Completion of Merger
This morning, SRA merged with and into a wholly-owned subsidiary of CSRA. In connection with the merger, former SRA shareholders received $390 million in cash and approximately 25 million CSRA shares, constituting approximately 15 percent of the outstanding CSRA common shares. Prior to the merger, SRA was owned by a shareholder group led by Providence Equity Partners and SRA’s founder, Dr. Ernst Volgenau, as well as members of its management team.
Entry into Financing Arrangements
Concurrently with the consummation of the spin-off and the mergers, CSRA entered into definitive agreements providing for approximately $3.5 billion in principal amount of secured indebtedness, of which $1.56 billion was drawn after the spin-off to fund the special dividends, transaction costs and repayment of indebtedness and $1.44 billion was drawn upon consummation of the merger to pay merger consideration and transaction costs and to refinance existing SRA indebtedness.
Approximately $500 million of available credit remains undrawn.
Appointment of Csra Directors and Officers
Effective November 27, 2015, Mike Lawrie, Keith B. Alexander, Sanju Bansul, Michèle A. Flournoy, Mark Frantz, Nancy Killefer, Sean O’Keefe, Larry Prior and Michael E. Ventling were appointed to CSRA’s Board of Directors, joining Billie Williamson who was appointed earlier as a member of CSRA’s Board and Audit Committee.
Additionally, upon completion of the merger with SRA, the CSRA Board appointed David F. Keffer as chief financial officer and John Reing as chief human resources officer.
Quarterly Cash Dividends and Csra Share Repurchase Program
CSC’s Board of Directors has declared a regular quarterly cash dividend of $0.14 per share on CSC common stock. The dividend will be paid on January 26, 2016 to CSC stockholders of record at the close of business on January 5, 2016.
CSRA’s Board of Directors has declared a regular quarterly cash dividend of $0.10 per share on CSRA’s common stock. The first quarterly dividend will be paid on January 26, 2016 to CSRA stockholders of record at the close of business on January 5, 2016.
Stockholders who continue to hold both CSC and CSRA shares will receive an increase in quarterly cash dividend of approximately 4 percent from the previous quarterly cash dividends paid by CSC.
CSRA’s Board of Directors authorized up to $400 million for future repurchases of outstanding shares of its common stock, from today’s date through March 31, 2019. (Original Source)
Shares of Computer Sciences closed last Friday at $68.62, down $0.84 or -1.21%. CSC has a 1-year high of $73.29 and a 1-year low of $58.77. The stock’s 50-day moving average is $67.02 and its 200-day moving average is $65.43.
On the ratings front, Computer Sciences has been the subject of a number of recent research reports. In a report issued on November 5, Deutsche Bank analyst Bryan Keane maintained a Hold rating on CSC. Separately, on September 1, BMO’s Keith Bachman reiterated a Hold rating on the stock and has a price target of $72.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Bryan Keane and Keith Bachman have a total average return of 16.6% and 17.9% respectively. Keane has a success rate of 79.7% and is ranked #98 out of 3649 analysts, while Bachman has a success rate of 62.7% and is ranked #66.
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).