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DXC drops $2B to acquire software development specialists

Tech giant targets deep vertical expertise
Mike Lawrie (DXC Technology)

Mike Lawrie (DXC Technology)

DXC Technology has unveiled plans to acquire global software development specialists Luxoft to drive digital capabilities across key market verticals.

The transaction, amounting to approximately US$2 billion, will see the technology giant take control of the Switzerland-based company in a deal expected to close by June 2019.

Luxoft provides digital strategy consulting and engineering services for customers across North America, Europe and Asia Pacific, with the acquisition aiming to leveraging bespoke digital engineering capabilities.

Headquartered in Zug, the company achieved US$911 million in revenue over the last four reported quarters, backed by “strong, double-digit” compound annual growth rate over the last three years.

“Luxoft and DXC are highly complementary, and our shared vision of digital transformation makes this strategic combination a great fit for both organisations - as well as enormously beneficial for our clients,” said Mike Lawrie, chairman, president and CEO of DXC Technology.

“Luxoft has a proven track record and expertise in producing measurable business outcomes at-scale for global clients across key industries, including automotive and financial services.”

According to Lawrie, Luxoft will expand DXC’s digital offerings portfolio globally, alongside broadening its presence in "high-growth verticals" such as the financial and automative sectors.

Specifically, Lawrie said the focus of the transaction will be centred around “cross-selling digital services”, as well as expanding into new markets and scaling digital talent.

“The addition of Luxoft accelerates DXC’s growth strategy as we equip the company to meet the digital requirements of our clients today and in the future,” Lawrie added.

Housing around 13,000 staff, Luxoft - founded in 2000 - serves “marquee clients” in every region, with particular depth in European markets.

In the automotive space, the combined company will serve more than 20 manufacturers and OEMs across North America, Europe and Asia Pacific, in addition to half of the top financial institutions in the Americas and Europe.

Terms of the deal will see Luxoft maintain its brand and will continue to be led by Dmitry Loschinin, the company’s current president and CEO, who will report to Lawrie.

“Our success in recent years has been led by our talent and ability to design, develop and deliver truly innovative digital solutions tailored to client business needs,” Loschinin said. “Aligning with DXC presents an exciting opportunity to unlock new value for our people, clients and partners.

"We will gain the scale, resources and market presence to better serve and compete, and to more rapidly realise our vision. As part of DXC, we will preserve Luxoft’s differentiated capabilities and culture while driving growth for the combined company.”

According to Lawrie, shareholders representing approximately 83 per cent of the total voting power of Luxoft have delivered written consents in support of the transaction.