DXC Acquires Microsoft Dynamics 365 Integrator Tribridge

DXC Technology Company (NYSE:DXC) , formed through the merger of Computer Sciences and the Enterprise Services business of Hewlett Packard Enterprise (NYSE:HPE) , made its first acquisition yesterday, buying the privately-held Tribridge company. However, financial terms of the deal remain disclosed.

DXC Technology intends to integrate Tribridge business under its DXC Eclipse business. Per the company, “DXC Eclipse is a leading global Microsoft (NASDAQ:MSFT) Gold Partner delivering Microsoft Dynamics 365, ERP, CRM, business process, analytics, and collaboration solutions on premise and in the cloud.”

However, the acquisition news did not have any impact on yesterday’s trading. Nonetheless, DXC Technology has outperformed the Zacks categorized IT Services industry since it started trading on the NYSE on Mar 31, 2017. The stock has returned 10.5% in the said period, while the industry gained 5%.

Founded in 1998, Tribridge caters software services and cloud solutions needs of mid-market and enterprise customers in the areas of finance and operations, customer engagement and human capital management. With approximately 740 employees, the company operates its business across North America and Europe.

Tribridge is one of the largest independent integrators of Microsoft’s (MSFT) Dynamics 365, which explains why this acquisition makes sense for DXC Technology. The Tampa, FL-based company is in partnership with Microsoft since 2004 and offers full suite of its Dynamics 365, ERP and CRM business applications.

Therefore, the integration of Tribridge business will further fortify DXC Technology’s position as a leading global systems integrator for Microsoft Dynamics. The acquisition will help the company in expanding and enhancing its offerings in healthcare, state and local government, consumer packaged goods and professional services.

Apart from this, DXC Technology will also benefit from Tribridge’s strategic partnerships with Cornerstone OnDemand Inc. (NASDAQ:CSOD) and Oracle’s (NYSE:ORCL) NetSuite. The business unit will now be known as Tribridge – a DXC Technology Company.

With this acquisition, DXC Technology will also get hold of the Tribridge affiliate company, Concerto Cloud Services. Concerto Cloud Services offers advisory services and fully managed private, public and hybrid cloud solutions to clients and strategic channel partners in the mid-market. This business unit will now be known as DXC Concerto.

We believe that the recent acquisition will further strengthen DXC Technology’s position as one of the leading IT services provider in the world. The buyout will not only widen the company’s customer base, but will also bring in new talent pool as well as additional revenues. Notably, as per Business Journal, Tribridge generated about $140 million of revenues in 2015.

Post merger, DXC Technology has become the world’s second largest end-to-end IT services providing company after Accenture plc (NYSE:ACN). We believe that the merger has opened up avenues of growth for the combined company. Following the footsteps of Computer Sciences, DXC Technology may be seen making strategic acquisitions to enhance its portfolio, which will likely drive growth over the long run.

Nonetheless, the market is very competitive with companies like CACI International Inc. and Accenture, which could hurt DXC Technology’s top and bottom lines. Additionally, a challenging macroeconomic situation and uncertain IT spending environment remain other headwinds.

Currently, DXC Technology carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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