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Computer Science Corporation (CSC) To Split Three Months After JANA Partners Went Activist

Computer Science Corporation (NYSE:CSC) is the latest company to split in an effort to boost its stock price. The $9.5 billion market cap IT provider announced yesterday along with its fiscal fourth quarter 2015 results that it will separate its global commercial business from its U.S. public sector unit, each becoming separate publicly traded companies. The move comes three months after Barry Rosenstein‘s JANA Partners built a large activist stake in the company, with the expectations that the fund would push for either a sale of the company (which Computer Science Corporation had reportedly been mulling already) or a split. The split is expected to be completed by the end of October and the company also announced it will pay a special dividend of $10.50 per share to shareholders at the close of the deal.

Barry Rosenstein - Jana Partners

Both newly-split companies will be industry leaders from day one. CSC Global Commercial had $8.1 billion in revenues for FY2015. The unit will continue to serve companies and non-US government clients around the world. It will have more than 1,000 customers and 51,000 employees serving them at 34 locations globally. CSC U.S. Public Sector will continue to serve U.S. federal and state and defense agencies. The business will be a leading IT services provider to national security. This unit brought in $4.1 billion in revenues for fiscal year 2015 and will employ 14,000 people.

Computer Sciences Corporation (NYSE:CSC) CEO Mike Lawrie said in the press release, “Our analysis shows significant benefits of going with a pure-play strategy. We expect this change to enable both businesses to enhance innovation and improve delivery, in ways that are consistent with the rate and pace of the markets they serve.”

Rosenstein held a position of 7.5 million shares valued at $487 million in Computer Science Corporation (NYSE:CSC) as of March 31. CSC also showed up as a new position in the equity portfolio of John Paulson’s Paulson & Co during the first quarter.

Disclosure: None

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