CSC shares leap on takeover talk
Lockheed Martin in the frame
CSC shares jumped more than $8 yesterday on rumours that the company could be in line for a massive takeover. Shares closed at $58 after floating at around $50 for most of the year.
Lockheed Martin is leading a group of investors who will pay up to $12bn for the services company. The group is offering between $64 and $65 a share, according to AP. Lockheed shares fell slightly on the news.
Lockheed is working with private investors Blackstone Group, Texas Pacific Group and Warburg Pincus. The Wall Street Journal, which broke the story, reckons Lockheed is keen to get its hands on CSC's government contracts while the private equity groups will get the commercial contracts.
Lockheed is primarily a defence contractor although it does have some IT services business - it took over the deeply troubled UK air traffic control project.
Buying CSC would give Lockheed solid government revenues and help it move towards the current buzzwords of "network-centric warfare and defence". As defence projects increasingly rely on software so Lockheed needs better software skills.®