WASHINGTON (dpa-AFX) - DXC Technology Inc. (DXC) Tuesday said it agreed to sell its U.S. state and local health and human services business to Veritas Capital for $5 billion in cash. DXC shares jumped 16% in the extended trading hours.
The deal is the initial outcome of a process announced by DXC in November 2019 to explore strategic alternatives for three of its non-core assets.
The transaction is expected to close no later than December 2020, subject to the satisfaction of customary closing conditions, including the receipt of certain third-party consents and regulatory approvals.
The proceeds are expected to be used to pay down debt, consistent with DXC's policy of maintaining a strong balance sheet and an investment grade credit profile.
'I'm pleased that we were able to identify such an outstanding home for our U.S. State and Local Health and Human Services business,' said Mike Salvino, DXC's president and chief executive officer. 'DXC has built a unique capability that currently serves 42 states and territories with an incredibly experienced and dedicated workforce.
'Throughout this process, we will continue to closely engage with all of our stakeholders to ensure that we meet our commitments and provide a seamless transition for our customers and our people,' Salvino concluded.
Further, the company announced that due to the volatile market environment and the current outlook for the fiscal 2021 transition year, it is withdrawing its previously provided forecast estimates for fiscal year 2022.
DXC closed Tuesday's trading at $16.43, up $0.79 or 5.05%, on the NYSE. The stock, further gained $2.77 or 16.86% in the after-hours trade.
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