Trading Update: DXC Technology

The hardest thing to say

We started buying DXC at USD 15.2 and had been buying all the way up to USD 20.22. Today, it is above USD 29. Our average price is at USD 17.03.

We will be proceeding to exit our DXC stake over the next 2 weeks.

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The overall price that Atos is willing to pay is around > USD 10b (including debt).

After selling their subsidiaries and paying down debt, DXC should have around USD 2-3b in net debt. With a market capitalization of USD 7.45b, the market is getting the math right.

While Salvino will shop around for a better deal, we doubt that anyone would have the appetite to swallow DXC whole. There is only a few other players who can take on DXC without indigestion and we just do not see them doing that now.

We lay out some scenario and decided that the logical choice is to take money off the table.

• If the deal fails and prices thread lower. We will look to re-enter the position lowering our cost back at USD 23 - 26 if Salvino stays around to run the shop. (40% possibility)

• If the deal closes and the share price stays flat. (30% possibility)

• If Atos pay at the top range which should give another 10%+ upside (20% possibility)

• If there is a competing bid at a much higher price (10% possibility)

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