CSC Merging with HPE’s Enterprise
Services Segment to Create Pure-Play
Global IT Services Leader
CSC Investor Relations - May 24, 2016
Legal disclaimer
In connection with the proposed transaction, Everett SpinCo, Inc., a wholly-owned subsidiary of Hewlett Packard Enterprise created for the
transaction (“Spinco”), will file with the SEC a registration statement on Form S-4/S-1 containing a prospectus and CSC will file with the SEC a proxy
statement on Schedule 14A and a registration statement on Form S-4 containing a prospectus. INVESTORS AND SECURITY HOLDERS ARE
ADVISED TO READ THE REGISTRATION STATEMENTS/PROSPECTUSES AND PROXY STATEMENT WHEN THEY BECOME AVAILABLE,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PARTIES AND THE PROPOSED TRANSACTION. Investors and
security holders may obtain a free copy of the prospectuses and proxy statement (when available) and other documents filed with the SEC by CSC,
Hewlett Packard Enterprise and Spinco at the SEC’s web site at http://www.sec.gov. Free copies of these documents, once available, and each of the
companies’ other filings with the SEC, may also be obtained from CSC’s web site at www.csc.com.
This communication is not a solicitation of a proxy from any investor or security holder. However, CSC, Hewlett Packard Enterprise, and certain of
their respective directors, executive officers and other members of management and employees, may be deemed to be participants in the solicitation
of proxies from stockholders of CSC in respect of the proposed transaction under the rules of the SEC. Information regarding CSC’s directors and
executive officers is available in CSCs 2015 Annual Report on Form 10-K filed with the SEC on June 8, 2015, and in its definitive proxy statement for
its annual meeting of stockholders filed on June 26, 2015. Information regarding Hewlett Packard Enterprise’s directors and executive officers is
available in Hewlett Packard Enterprise’s 2015 Annual Report on Form 10-K filed with the SEC on December 17, 2015, and in its definitive proxy
statement for its annual meeting of stockholders filed on February 12, 2016. These documents as well as other documents filed by CSC, Hewlett
Packard Enterprise or Spinco with the SEC can be obtained free of charge from the sources indicated above. Other information regarding the
participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the
registration statements, prospectuses and proxy statement and other relevant materials to be filed with the SEC when they become available.
This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall
there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section
10 of the Securities Act of 1933, as amended.
All statements in this presentation and in all future presentations that do not directly and exclusively relate to historical facts constitute “forwardlooking statements.” These statements represent the Company’s intentions, plans, expectations and beliefs, and are subject to risks, uncertainties
and other factors, many of which are outside the Company’s control. Many factors could cause actual results to differ materially from such forwardlooking statements with respect to the announced transaction including risks relating to the completion of the transaction on anticipated timing,
including obtaining shareholder and regulatory approvals, anticipated tax treatment, unforeseen liabilities, future capital expenditures, inability to
achieve expected synergies, loss of revenues, delay or business disruption caused by difficulties in integrating the businesses of CSC and Enterprise
Services . For a written description of risk factors that could cause actual result in CSC’s business to differ materially from forward looking statements
regarding those matters, see the section titled “Risk Factors” in CSC’s Form 10-K for the fiscal year ended April 3, 2015 and any updating information
in subsequent SEC filings. The Company disclaims any intention or obligation to update these forward-looking statements whether as a result of
subsequent event or otherwise, except as required by law.
1
Contents
Announcement
Strategic rationale
Transaction Overview
Benefits
Summary
2
ANNOUNCEMENT
STRATEGIC RATIONALE
TRANSACTION
BENEFITS
SUMMARY
CSC to combine with HPE’s Enterprise Services division to
form pure-play global IT services leader
CSC is a Trusted
Next-Generation IT
Partner for Fortune
500 Companies
CSC
New Company
$8B
$26B
Revenue
Revenue
HPE’s Enterprise
Services business
is the IT
Transformation
Partner of Choice
for Enterprises
HPE’s
Enterprise
Services unit
$18B
Revenue
New Company will be one of the world’s largest
pure-play IT services companies, uniquely
positioned to lead client digital transformations
$1B
$1.5B
Y1 cost
takeout
Annualized
Y1 cost
synergies
Additional
synergies
to follow
Note: CSC FY16 Revenue (Pro Forma for Xchanging and UXC), Hewlett Packard Enterprise FY15 Q3, Q4 and FY16 Q1, Q2 Revenue
3
ANNOUNCEMENT
STRATEGIC RATIONALE
TRANSACTION
BENEFITS
SUMMARY
CSC and HPE embarked on parallel journeys over the last
several years
▪
Both organizations have been on upward
trajectories with significant improvement in:
– Operating model
– Labor mix
– Financial profile
▪
Both companies separated last year into more
client-focused, pure-play entities
Separation allowed for each to focus on leading
clients through digital transformations and providing
best-in-class industry expertise
Common
trajectories
Strategic
separations to
focus on
clients
The logical next
step is a shared
one
▪
▪
▪
Merger of these two organizations is the next
logical step in their respective journeys
Merger builds on progress to date and significantly
accelerates transformations for both companies
4
ANNOUNCEMENT
STRATEGIC RATIONALE
TRANSACTION
BENEFITS
SUMMARY
CSC and HPE Enterprise Services will be a $26 billion market
leader across industries and offerings
As a combined entity, CSC and HPE’s Enterprise Services unit will be one of the largest, global pure-play
IT services companies, uniquely positioned with world-class capabilities to lead clients’ digital transformations
Increased
scale
Industry
leadership
Actionable cost
synergy roadmap
Scaled financial
platform for growth
Strong combined
leadership
▪ $26B of annual
▪ Vertical leader in
▪ $1B takeout in
▪ Capital capacity to
▪ Proven and highly
▪
▪
revenue in FY16
5,000+ customers
across 70
countries
Leading pure-play
global IT services
company
▪
priority industries
(insurance,
healthcare,
transportation,
pharma, financial
services)
Poised to lead
digital
transformation
with $3B+ in next
generation
offerings
▪
▪
year 1
Realize $1.5B in
annualized cost
synergies by end
of first year
Additional
synergies to
follow
▪
▪
invest and grow
Investment grade
capital structure
Strong free cash
flow profile
experienced
management with
proven
transformation
record
5
ANNOUNCEMENT
STRATEGIC RATIONALE
TRANSACTION
BENEFITS
SUMMARY
Snapshot of CSC and HPE’s Enterprise Services Combined
Significant scale
Diversified businesses
70+
95
Countries
Data centers
5,000+
<15%
Top 200 account
overlap
Clients
85
Delivery centers
Market-leading industry & IP
Insurance
Transportation
Healthcare
>20
Regional mix (%)
USPS
USPS
11
Americas
11
APAC
10
43 GIS
GBS 34
38
20
12
Next Gen
EMEA
21
UK&I
> $3B in next-gen offerings
Financial
services
Consumer products
Competitive delivery at scale
~50%
Business mix (%)
Cloud
Cyber
Next-gen workplace
Apps
Big Data & Analytics
Strategic partnerships
Low-cost labor mix
Global delivery centers
6
ANNOUNCEMENT
STRATEGIC RATIONALE
TRANSACTION
BENEFITS
SUMMARY
Transaction overview
▪
▪
Transaction
structure
Timing and
closing
conditions
▪
▪
▪
▪
▪
Targeted close no later than March 31, 2017
Closing conditions: Carve out audited financials for HPE’s
Enterprise Services unit; filing requirements, regulatory
approvals, CSC shareholder vote
▪
Mike Lawrie to serve as president, chairman and CEO of
combined company
Meg Whitman will join Board of Directors, which will be split
50/50 between CSC and HPE
Paul Saleh will continue as CFO after transaction closes
Mike Nefkens will be a key part of the new company’s
executive team reporting to Mike Lawrie
▪
Governance
Transaction uses a Reverse Morris Trust
Existing shareholders will each own ~50% of outstanding
shares
$1.5B cash distribution to Hewlett Packard Enterprise
HP to own $4.5B in equity
Combined company to assume $2.5 billion of debt and other
liabilities
▪
▪
7
ANNOUNCEMENT
STRATEGIC RATIONALE
TRANSACTION
BENEFITS
SUMMARY
CSC and HPE’s Enterprise Services unit combination creates
value for all stakeholders
Benefits
Clients
Employees
Alliance Partners
Shareholders
▪ Expanded access to
▪ Enhanced brand
▪ Strong sales / GTM
▪ Scale, innovation and
▪
digital innovation
World-class industry
knowledge and nextgeneration offerings
▪
recognition; greater
ability to attract top
talent
Greater career
opportunities due to a
broader group of
clients and services
▪
▪
channel
Expanded access to
differentiated nextgen offerings
New potential
partners expected to
create new business
and client
opportunities
▪
financial resources to
achieve and sustain
market leadership
Value capture from
substantial cost
synergies in year 1
($1B)
8
ANNOUNCEMENT
STRATEGIC RATIONALE
TRANSACTION
BENEFITS
SUMMARY
Key takeaways
CSC and
HPE’s Enterprise
Services unit are
combining into one leading
publicly traded company
with substantial scale,
reach and world-class
capabilities
New Company will
be uniquely
positioned to lead
client digital
transformations at
scale
Merger creates
compelling value
proposition for
clients, investors,
partners, and
employees
9