IBM-Spinoff Kyndryl, Apollo Eyeing DXC Technology In Potential Joint Acquisition: Report

Apollo Global Management Inc APO and Kyndryl Holdings Inc KD, a spinoff from IBM, are reportedly considering a joint bid for DXC Technology Co DXC.

What Happened: Apollo and Kyndryl are in discussions regarding a potential acquisition offer for DXC, with the per-share bid ranging between $22 and $25, Reuters reported, citing sources.

This news caused DXC’s shares to surge by 11% and conclude Monday’s trading at $18.45, resulting in a market value of $3.3 billion.

DXC, which also operates as an IT services provider, is concurrently seeking bids for the sale of its insurance software business, valued at over $2 billion.

The company may also choose to remain independent under the leadership of Raul Fernandez, who took over as CEO in February.

DXC’s revenue has been impacted over the past year due to factors such as high interest rates and concerns about an economic slowdown, prompting many of its corporate clients to cut back on spending. The company’s shares have suffered a decline of more than 30% in the last 12 months.

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DXC has responded to this downturn through a series of cost-cutting measures and restructuring initiatives. The company, based in Ashburn, Virginia, has stated that it last engaged in acquisition talks last year, which were terminated after a private equity suitor failed to secure the necessary financing.

Apollo Global Management, Kyndryl Holdings, and DXC Technology did not immediately respond to Benzinga's request for comment.

Why It Matters: The potential joint bid by Apollo and Kyndryl comes at a time when the latter has been receiving positive attention from Wall Street. Kyndryl Holdings Inc. has an average brokerage recommendation of 1.40, indicating a strong buy sentiment among analysts. This, coupled with the company’s market value of $6 billion, positions Kyndryl as a significant player in the IT services sector.

On the other hand, Apollo Global Management Inc. is a major player in private equity and corporate credit assets, with assets under management totaling $671 billion. The potential collaboration between Apollo and Kyndryl for the acquisition of DXC Technology Co. could have significant implications for the IT services industry.

Price Action: DXC Technology traded at $19.25 in after-hours trading, up 4.34% following Monday’s market close, according to the data from Benzinga Pro.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote