Computer Sciences Corporation
On February 23, 2015, activist hedge fund JANA Partners disclosed a 5.9% stake in Computer Sciences Corporation (CSC). The information technology and professional services provider saw JANA initiating a stake in 4Q14, and the fund held a 2% stake in CSC at the end of the fourth quarter. The position was further raised by 8.4 million shares to a 5.9% stake at the end of February.
JANA wants CSC to seek “strategic alternatives”
According to JANA Partners, CSC is undervalued and is an attractive investment opportunity. JANA noted in its filing that it “has had and may continue to have discussions with members of the issuer’s board of directors and management team regarding potential strategic alternatives.” These strategic alternatives could include a merger or acquisition.
Computer Sciences Corporation said in response to JANA’s activist stake, “We welcome all investments in CSC,” and that it “remains focused on maximizing shareholder value.”
CSC subject of leveraged buyout rumors
A February 23, 2015, Washington Business Journal report by Jill Aitoro cited unconfirmed information from DealReporter, noting that Computer Sciences Corporation is in an advanced stage to sell itself to a private equity firm and a foreign entity. The report stated that CSC is looking to sell its North American public sector business to a financial sponsor and two commercial segments to a foreign strategic partner. CSC’s share price rose 7% on this news to $71.74.
This is not the first time that rumors of a takeover of Computer Sciences Corporation have surfaced. In September 2014, an unconfirmed Bloomberg report said that CSC was in discussions with private equity firms Bain Capital and The Blackstone Group (BX) over a potential takeover. The speculation pushed CSC’s stock up 5.3% to $59.62.
Computer Sciences Corporation has declined to comment on these speculations.
JANA’s other key fourth quarter positions
Apart from Computer Sciences Corporation, JANA increased its stake in Valeant Pharmaceuticals (VRX) and added a new position in Salix Pharmaceuticals (SLXP). Recently, Valeant agreed to acquire Salix. JANA’s other new positions were NCR Corp. (NCR) and SolarCity (SCTY).
You can gain diversified exposure to Computer Sciences Corporation by investing in the SPDR S&P 500 ETF Trust (SPY) and the iShares S&P 500 Index ETF (IVV). CSC accounts for 0.05% in both SPY and IVV.
In the next part of this series, we’ll discuss JANA’s track record as an activist investor.