DXC Technology To Buy ServiceNow Integrator Logicalis SMC

DXC Technology Company (NYSE:DXC) recently announced entering into an agreement with Logicalis Group to buy the latter’s service management consultancy operation — Logicalis SMC. However, financial terms of the deal remain disclosed.

The Netherlands-based Logicalis SMC was founded in 1998. This company is one of the leading providers of technology-enabled solutions for the service management sector in the Netherlands and the U.K.

Moreover, Logicalis SMC is one of the biggest integrator of ServiceNow Inc.’s (NYSE:NOW) software and solutions, which mainly attracted DXC Technology to make such a move. It should be noted that Logicalis SMC was the first European company which became ServiceNow’s Master Solutions partner around 15 years ago.

DXC Technology intends to integrate the to-be-acquired business with its Fruition Partners business which is the company’s leading global ServiceNow platform provider.

The integration of Logicalis SMC business will further fortify DXC Technology’s position as a leading global software integrator for ServiceNow. The acquisition will help the company expand its presence across Europe. Also, it will strengthen its “scale, reach, industry experience and skills portfolio in the fast-growing enterprise software-as-a-service (SaaS) market.”

Apart from this, DXC Technology will also benefit from Logicalis SMC’s strategic partnerships with companies like Cisco, International Business Machines (NYSE:IBM) and NetApp (NASDAQ:NTAP) .

DXC Technology came into existence from the merger of the Computer Sciences and the Enterprise Services business of Hewlett Packard Enterprise (NYSE:HPE) . The buyout of Logicalis SMC will mark DXC Technology’s second acquisition post its formation.

This July, the company acquired privately-held Tribridge. 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.

Since its first trading on Apr 4, 2017, DXC Technology has gained 26.3%, significantly outperforming the industry, to which it belongs to, return of 19.7%.

We believe the recent buyouts will further solidify DXC Technology’s position as one of the leading IT services provider in the world.

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 the merger has opened up a number of growth opportunities 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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