New takeover talk propels CSC

Renewed speculation regarding the sale of Computer Sciences Corp., helped propel the company’s stock, which ranked near the top of the gainers column in FCW’s latest Tech Index.

stocks CSC’s stock climbed 5.9 percent for the period from February 27 to March 13. The integrator was second to Sun Microsystems, which gained 9.71 percent. Overall, the Tech Index rose 2.29 percent for the period, outpacing the Nasdaq’s .44 percent increase.

CSC has been the subject of takeover speculation since November 2005, when Lockheed Martin was said to be the suitor. In January, the discussion shifted to name Hewlett-Packard as the interested party. But the rumor mill fired up again this month. Goldman Sachs, in a March statement to investors, noted an uptick in CSC’s share price “on a resurgence in take-over speculation.”

The Goldman Sachs note said the recent speculation appeared to place IBM as CSC’s suitor. But Goldman Sachs analysts described the emergence of a strategic buyer from the information technology services industry or private equity as unlikely. The analysts said they believe CSC is already well-run, “limiting the opportunity to restructure [and] boost performance.”

CSC, which ranks among the largest IT services players at $14 billion in annual revenue, has periodically found itself at the center of takeover talk. In 1998, Computer Associates International launched an unsolicited $9 billion offer for the systems integrator. CA dropped its bid after weeks of escalating hostilities between the companies.


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