Skip to main content

HPE Plans Tax-Free Spin-Off and Merger of Enterprise Services Business with CSC

Hewlett Packard Enterprise (HPE) announced plans for a tax-free spin-off and merger of its Enterprise Services business with CSC.

Immediately following the transaction, currently targeted to be completed by March 31, 2017, HPE shareholders will own shares of both HPE and approximately 50 percent of the new company. The transaction is intended to be tax-free to HPE and CSC and their respective shareholders for federal income tax purposes.

"The 'spin-merger' of HPE's Enterprise Services unit with CSC is the right next step for HPE and our customers," said Meg Whitman, President and CEO of Hewlett Packard Enterprise. "Enterprise Services' customers will benefit from a stronger, more versatile services business, better able to innovate and adapt to an ever-changing technology landscape."

"As a more powerful, versatile and independent global technology services business, this new company will be well positioned to help clients succeed on their digital transformation journeys," said Mike Lawrie, CSC Chairman, President and CEO. "Together, CSC and HPE's Enterprise Services will have the scale, foundation and next-generation technologies to innovate, compete and grow in a rapidly changing marketplace. We are excited by the great potential this merger brings to our people, clients, partners and investors, and by the opportunity to strengthen our relationship with Hewlett Packard Enterprise."

On a pro forma basis, the new company that combines CSC and HPE's Enterprise Services business is expected to have annual revenues of approximately $26 billion, more than 5,000 customers in 70 countries and employees in every major global region.

Mike Lawrie, the current head of CSC, will become chairman, president and CEO of the new company, and Meg Whitman will join the Board of Directors. The new company's board will be split 50/50 between directors nominated by HPE and CSC. CSC's current CFO, Paul Saleh, will continue in that role in the new company after the transaction closes. Additionally, Mike Nefkens, the current EVP and GM of HPE's Enterprise Services business, will be a key part of the new company's executive team and partner closely with Lawrie on building the new organization. Other executives and directors of the merged company, as well as the name of the company, will be announced at a later date.

The transaction is expected to deliver approximately $8.5 billion to HPE's shareholders on an after-tax basis. This includes an equity stake in the newly combined company valued at more than $4.5 billion, which represents approximately 50 percent ownership, a cash dividend of $1.5 billion, and the assumption of $2.5 billion of debt and other liabilities. The merger of the two businesses is expected to produce first-year cost synergies of approximately $1 billion post-close, with a run rate of $1.5 billion by the end of year one. There is an opportunity for additional synergies in subsequent years. As owners of approximately 50 percent of the merged company, HPE shareholders will share in the value of the synergies, as well as future growth in earnings.

One-time costs to separate the Enterprise Services segment from HPE will be offset by lower costs associated with the fiscal 2015 restructuring plan; there are no incremental one-time cash payments beyond those already communicated. The transaction is subject to certain customary closing conditions.

Goldman Sachs & Co. is serving as financial advisor to HPE on the transaction.

The Latest

AI is the catalyst for significant investment in data teams as enterprises require higher-quality data to power their AI applications, according to the State of Analytics Engineering Report from dbt Labs ...

Misaligned architecture can lead to business consequences, with 93% of respondents reporting negative outcomes such as service disruptions, high operational costs and security challenges ...

A Gartner analyst recently suggested that GenAI tools could create 25% time savings for network operational teams. Where might these time savings come from? How are GenAI tools helping NetOps teams today, and what other tasks might they take on in the future as models continue improving? In general, these savings come from automating or streamlining manual NetOps tasks ...

IT and line-of-business teams are increasingly aligned in their efforts to close the data gap and drive greater collaboration to alleviate IT bottlenecks and offload growing demands on IT teams, according to The 2025 Automation Benchmark Report: Insights from IT Leaders on Enterprise Automation & the Future of AI-Driven Businesses from Jitterbit ...

A large majority (86%) of data management and AI decision makers cite protecting data privacy as a top concern, with 76% of respondents citing ROI on data privacy and AI initiatives across their organization, according to a new Harris Poll from Collibra ...

According to Gartner, Inc. the following six trends will shape the future of cloud over the next four years, ultimately resulting in new ways of working that are digital in nature and transformative in impact ...

2020 was the equivalent of a wedding with a top-shelf open bar. As businesses scrambled to adjust to remote work, digital transformation accelerated at breakneck speed. New software categories emerged overnight. Tech stacks ballooned with all sorts of SaaS apps solving ALL the problems — often with little oversight or long-term integration planning, and yes frequently a lot of duplicated functionality ... But now the music's faded. The lights are on. Everyone from the CIO to the CFO is checking the bill. Welcome to the Great SaaS Hangover ...

Regardless of OpenShift being a scalable and flexible software, it can be a pain to monitor since complete visibility into the underlying operations is not guaranteed ... To effectively monitor an OpenShift environment, IT administrators should focus on these five key elements and their associated metrics ...

An overwhelming majority of IT leaders (95%) believe the upcoming wave of AI-powered digital transformation is set to be the most impactful and intensive seen thus far, according to The Science of Productivity: AI, Adoption, And Employee Experience, a new report from Nexthink ...

Overall outage frequency and the general level of reported severity continue to decline, according to the Outage Analysis 2025 from Uptime Institute. However, cyber security incidents are on the rise and often have severe, lasting impacts ...

HPE Plans Tax-Free Spin-Off and Merger of Enterprise Services Business with CSC

Hewlett Packard Enterprise (HPE) announced plans for a tax-free spin-off and merger of its Enterprise Services business with CSC.

Immediately following the transaction, currently targeted to be completed by March 31, 2017, HPE shareholders will own shares of both HPE and approximately 50 percent of the new company. The transaction is intended to be tax-free to HPE and CSC and their respective shareholders for federal income tax purposes.

"The 'spin-merger' of HPE's Enterprise Services unit with CSC is the right next step for HPE and our customers," said Meg Whitman, President and CEO of Hewlett Packard Enterprise. "Enterprise Services' customers will benefit from a stronger, more versatile services business, better able to innovate and adapt to an ever-changing technology landscape."

"As a more powerful, versatile and independent global technology services business, this new company will be well positioned to help clients succeed on their digital transformation journeys," said Mike Lawrie, CSC Chairman, President and CEO. "Together, CSC and HPE's Enterprise Services will have the scale, foundation and next-generation technologies to innovate, compete and grow in a rapidly changing marketplace. We are excited by the great potential this merger brings to our people, clients, partners and investors, and by the opportunity to strengthen our relationship with Hewlett Packard Enterprise."

On a pro forma basis, the new company that combines CSC and HPE's Enterprise Services business is expected to have annual revenues of approximately $26 billion, more than 5,000 customers in 70 countries and employees in every major global region.

Mike Lawrie, the current head of CSC, will become chairman, president and CEO of the new company, and Meg Whitman will join the Board of Directors. The new company's board will be split 50/50 between directors nominated by HPE and CSC. CSC's current CFO, Paul Saleh, will continue in that role in the new company after the transaction closes. Additionally, Mike Nefkens, the current EVP and GM of HPE's Enterprise Services business, will be a key part of the new company's executive team and partner closely with Lawrie on building the new organization. Other executives and directors of the merged company, as well as the name of the company, will be announced at a later date.

The transaction is expected to deliver approximately $8.5 billion to HPE's shareholders on an after-tax basis. This includes an equity stake in the newly combined company valued at more than $4.5 billion, which represents approximately 50 percent ownership, a cash dividend of $1.5 billion, and the assumption of $2.5 billion of debt and other liabilities. The merger of the two businesses is expected to produce first-year cost synergies of approximately $1 billion post-close, with a run rate of $1.5 billion by the end of year one. There is an opportunity for additional synergies in subsequent years. As owners of approximately 50 percent of the merged company, HPE shareholders will share in the value of the synergies, as well as future growth in earnings.

One-time costs to separate the Enterprise Services segment from HPE will be offset by lower costs associated with the fiscal 2015 restructuring plan; there are no incremental one-time cash payments beyond those already communicated. The transaction is subject to certain customary closing conditions.

Goldman Sachs & Co. is serving as financial advisor to HPE on the transaction.

The Latest

AI is the catalyst for significant investment in data teams as enterprises require higher-quality data to power their AI applications, according to the State of Analytics Engineering Report from dbt Labs ...

Misaligned architecture can lead to business consequences, with 93% of respondents reporting negative outcomes such as service disruptions, high operational costs and security challenges ...

A Gartner analyst recently suggested that GenAI tools could create 25% time savings for network operational teams. Where might these time savings come from? How are GenAI tools helping NetOps teams today, and what other tasks might they take on in the future as models continue improving? In general, these savings come from automating or streamlining manual NetOps tasks ...

IT and line-of-business teams are increasingly aligned in their efforts to close the data gap and drive greater collaboration to alleviate IT bottlenecks and offload growing demands on IT teams, according to The 2025 Automation Benchmark Report: Insights from IT Leaders on Enterprise Automation & the Future of AI-Driven Businesses from Jitterbit ...

A large majority (86%) of data management and AI decision makers cite protecting data privacy as a top concern, with 76% of respondents citing ROI on data privacy and AI initiatives across their organization, according to a new Harris Poll from Collibra ...

According to Gartner, Inc. the following six trends will shape the future of cloud over the next four years, ultimately resulting in new ways of working that are digital in nature and transformative in impact ...

2020 was the equivalent of a wedding with a top-shelf open bar. As businesses scrambled to adjust to remote work, digital transformation accelerated at breakneck speed. New software categories emerged overnight. Tech stacks ballooned with all sorts of SaaS apps solving ALL the problems — often with little oversight or long-term integration planning, and yes frequently a lot of duplicated functionality ... But now the music's faded. The lights are on. Everyone from the CIO to the CFO is checking the bill. Welcome to the Great SaaS Hangover ...

Regardless of OpenShift being a scalable and flexible software, it can be a pain to monitor since complete visibility into the underlying operations is not guaranteed ... To effectively monitor an OpenShift environment, IT administrators should focus on these five key elements and their associated metrics ...

An overwhelming majority of IT leaders (95%) believe the upcoming wave of AI-powered digital transformation is set to be the most impactful and intensive seen thus far, according to The Science of Productivity: AI, Adoption, And Employee Experience, a new report from Nexthink ...

Overall outage frequency and the general level of reported severity continue to decline, according to the Outage Analysis 2025 from Uptime Institute. However, cyber security incidents are on the rise and often have severe, lasting impacts ...