What: The share price of information technology (IT) services company UXC Limited (ASX: UXC) is set to trade higher when it exits a trading halt after the company announced before the market opened on Wednesday morning that it had entered into a Scheme Implementation Deed with the US$9.6 billion Nasdaq-listed Computer Sciences Corporation (CSC).
So What: The acquisition offer has been struck at a price of $1.22 per share plus an additional 2 cent franked interim dividend. The offer marks a premium of around 8% to the $1.15 price at which the stock last traded before entering a trading halt on Monday morning.
Now What: The takeover offer for UXC is a reminder for investors that the IT services sector could be a happy hunting ground for potential investment opportunities.
A number of UXC's peers including SMS Management & Technology Limited (ASX: SMX) and DWS Ltd (ASX: DWS) have performed reasonably well in recent times however over the medium term of the past five years their share price performance remains well below that of the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) with falls of 55% and 17% respectively.
It begs the question of whether there could be further merger and acquisition (M&A) ahead for the IT services sector…
According to consensus forecasts, SMS and DWS are trading on forecast price-to-earnings (PE) ratios of roughly 13x and 12x respectively which compares favourably against the 15x that UXC is trading on. The relative valuation of both stocks could make them worth a closer look by inquisitive investors with the potential for a pick-up in M&A across the sector a handy bonus.