Exclusive: Cap Gemini, Carlyle held talks to buy Computer Sciences - sources
By Mike Stone and Liana B. Baker (Reuters) - Technology consultant Computer Sciences Corp drew buyout interest from French consulting company Cap Gemini SA and private equity firm Carlyle Group LP, according to people familiar with the matter. Talks between CSC and the consortium of Cap Gemini and Carlyle started late last year but have since fizzled, the sources said on Tuesday. It is unclear whether these talks will resume, they added. CSC, which has a market capitalization of about $10 billion, is now working with Royal Bank of Canada to review its options, the people said. The sources requested anonymity because the talks are confidential. Cap Gemini said it was not engaged in ongoing discussions regarding a transaction. CSC, Carlyle and Royal Bank of Canada declined to comment. Computer Sciences shares ended trading on Tuesday down 1.3 percent at $70.84 Hedge fund Jana Partners LLC disclosed a 5.9 percent stake in CSC on Monday and said it would continue talks with the IT services and government contracting company about strategic alternatives and its board composition. CSC's customers include governments as well as commercial enterprises around the world. France's Cap Gemini would need an American partner such as Carlyle to purchase any part of CSC's business that cannot be owned by a non-U.S. entity for national security reasons. One of CSC's customers is the U.S. Department of Defense. CSC has been the subject of buyout interest over the years. One person close to a previous round of discussions, nearly 10 years ago, said talks fell apart because another party and a private equity firm that had "partnered" to buy CSC could not agree on how to divide the Falls Church, Virginia-based company. CSC’s revenue has been on the decline this year, dropping 4.2 percent in the first nine months of its current fiscal year to $9.26 billion. CEO Mike Lawrie blamed the sales decline partly on “execution missteps” in a Feb 9 conference call. The company is in the midst of a cost-cutting campaign while also facing sequestration and budget pressures from the U.S. government. (Reporting by Mike Stone and Liana Baker in New York with additional reporting by Jim Finkle in Boston; Editing by Lisa Von Ahn, Cynthia Osterman and Ken Wills)
