Based on reports, there are discussions underway for the potential acquisition of DXC Technology by Kyndryl, which could present new possibilities for CIOs contending with legacy integration difficulties.
According to reports from Reuters, Kyndryl is currently in negotiations with private equity firm Apollo Global regarding a potential bid for DXC. It is speculated that the bid could range between $22 to $25 per share. Following this news, the share price of DXC experienced a noticeable increase from $16 when the markets opened on Monday to nearly $19 at close on Wednesday.
Additionally, DXC is exploring the possibility of selling its insurance software business for more than $2 billion, as well as considering remaining an independent company under the leadership of CEO Raul Fernandez, who assumed the position in February.
Steven Dickens, Vice President of Hybrid Cloud at The Futurum Group, expressed his optimism regarding the potential acquisition. He highlighted the significant role that scale plays in IT infrastructure services, affirming that Kyndryl is the largest player with strong partnerships in the industry. He noted that Kyndryl has been particularly proactive in driving mainframe modernization and possesses a much larger and more developed innovation roadmap compared to DXC.
However, DXC’s stock performance this year has been less than stellar, having experienced a decline from a 5-year high of $56.64 in 2019 to $24.19 at the beginning of 2021. Dickens believes that the potential acquisition by Kyndryl presents an opportunity for the latter to drive innovation and reduce costs.
In an attempt to gather comments, CIO.com reached out to media representatives for DXC, Apollo, and Kyndryl, but received no responses.
Throughout the year, Kyndryl has been focusing on expanding its consulting business, Kyndryl Consult, in an effort to achieve growth by broadening its partnership ecosystem to offer a wider range of services. This strategic move enables Kyndryl to capitalize on growing technology trends such as digital transformation, cloud migration, and data management, ultimately boosting its revenue.
On the other hand, DXC is comprised of two primary segments, global infrastructure services and global business services.
In conclusion, the potential acquisition of DXC by Kyndryl could have significant implications for the IT industry, particularly in addressing legacy integration challenges faced by CIOs. Should the deal proceed, it may lead to a transformation in the landscape of IT infrastructure services, with Kyndryl poised to enhance its offerings and drive growth in the coming years.