Hewlett Packard Enterprise will spin-off its Enterprise Services business and merge the unit with CSC, creating a pure-play, global IT services company with annual revenues of approximately $26 billion, more than 5,000 customers in 70 countries and employees in every major global region.
The companies said the combination will give them greater scale to service global clients migrating to the cloud. The deal is expected to produce first-year cost synergies of approximately $1 billion post-close, with run rate of $1.5 billion by end of year one.
Mike Lawrie, the current head of CSC, will become chairman, president and CEO of the new company, and Meg Whitman will join the Board of Directors. The new company’s board will be split 50/50 between directors nominated by HPE and CSC.
After the spin-off, the remaining HPE will still have $33 billion in expected annual revenue. The company says the plan enables it to sharpen its focus on secure, next-generation, software-defined infrastructure built on its portfolio of servers, storage, networking, converged infrastructure, as well as its Helion Cloud platform and software assets.
“The ‘spin-merger’ of HPE’s Enterprise Services unit with CSC is the right next step for HPE and our customers,” said Meg Whitman, president and chief executive officer of Hewlett Packard Enterprise. “Enterprise Services’ customers will benefit from a stronger, more versatile services business, better able to innovate and adapt to an ever-changing technology landscape.”
“As a more powerful, versatile and independent global technology services business, this new company will be well positioned to help clients succeed on their digital transformation journeys,” said Mike Lawrie, CSC chairman, president and chief executive officer. “Together, CSC and HPE’s Enterprise Services will have the scale, foundation and next-generation technologies to innovate, compete and grow in a rapidly changing marketplace. We are excited by the great potential this merger brings to our people, clients, partners and investors, and by the opportunity to strengthen our relationship with Hewlett Packard Enterprise.”
