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DXC declines "inadequate" Atos offer; French firm walks.

Discussions "discontinued". Atos shares rise, DXC's drop.

French IT services firm Atos has walked away from talks with DXC after the latter rejected a buyout proposal widely reported to have been for ~$10 billion, saying its board had "unanimously determined not to pursue a potential transaction" after an initial offer was rejected.

DXC meanwhile said in a statement late Monday the offer was "inadequate and lacking certainty in light of the value the Board believes DXC can create on a standalone basis".

Atos shares rebounded  rebounded 3% on the move, giving it a valuation of $8.2 billion. They had tumbled after the proposal was reported. DXC's shares meanwhile plummeted as the deal fell through. Shareholders may yet live to regret the deal being rejected.

DXC was born through a merger of Computer Sciences Corp and the Enterprise Services arm of HPE in 2017. It was valued at $26 billion at the time. Current market cap was $6.4 billion as we published.

DXC reported losses of $246 million in its last quarter on revenues of $4.5 billion, but believes it is making progress in a sweeping restructuring, under new leadership. It recently offloaded a US healthcare business to Veritas for $5 billion to pay down debt. Blue chip clients include BP.

"Consistent with its fiduciary duties, the DXC Board of Directors carefully evaluated the proposal, together with its financial and legal advisors. The offer was determined to be inadequate and lacking certainty in light of the value the Board believes DXC can create on a standalone basis by executing our transformation journey," DXC said late Monday.

It added: "After sharing certain high-level information in order to help Atos understand why the Board believes the proposal undervalued DXC, Atos and DXC today agreed to discontinue further discussions."

M&A activity tumbled 19% in 2020, with only 13 deals worth over $1 billion taking place, against 28 announced in 2019. Ciesco, which reported the data, anticipates a significant upswing in deals in 2021.

See also: Global tech M&A tumbled in 2020, with $1b+ deals collapsing. 2021’s outlook is brighter.