Possible Sale of CSC Is Off the Table
Computer Sciences Corp. said Thursday that its directors authorized the repurchase of nearly one-fifth of its common stock, ending the company’s process to explore a possible sale of the business or other “strategic alternative.â€
The El Segundo-based company also said the Securities and Exchange Commission had made an informal request for information related to its stock option grants and option practices.
The buyback authorization was for as much as $2 billion, representing about 19% of the company’s outstanding stock.
Computer Sciences said in April that it had received “expressions of interest†to be bought and that the firm had hired investment bank Goldman, Sachs & Co. to advise it. The company’s stock soared last fall on rumors that private equity firms were interested in acquiring the business.
Lockheed Martin Corp. and Hewlett-Packard Co. also were rumored to be interested in pieces of the company, which provides computer services and consulting to businesses and government entities.
But Computer Sciences indicated Thursday that a sale was off the table and that it instead would proceed with a share repurchase. The buyback reflects “the board’s confidence in CSC’s prospects as an independent company,†the firm said.
The share repurchases would be funded initially with cash on hand and short-term borrowings, the company said.
Computer Sciences also said that it expected its results for the quarter ending today to be in line with its May 23 forecast for revenue of $3.4 billion to $3.5 billion and earnings per share in the mid-60-cent range, excluding options expenses of about 4 cents a share and restructuring charges.
The company said it was cooperating fully with the SEC’s request for information on its option practices.
Federal prosecutors, the SEC and the Internal Revenue Service are investigating dozens of companies over possible manipulation of grant dates and exercise prices of stock options to boost their value to the executives who received them.
Computer Sciences shares rose 57 cents to $55.88 in regular trading, then fell to $54 in late trading after the announcements.
