Computer Sciences Corp. [CSC] completes spinoff of CSRA

The former CSC is now two companies. Dividends for each independent company to increase by approximately 4 percent in 2016.

CSC and CSRA officials ring the NYSE opening bell Monday morning, November 30, 2015, celebrating their official reincarnation as two independent companies. (Image via CSC's website)

FALLS CHURCH, Virginia, November 30, 2015 – “Old” Computer Sciences Corp. (symbol: CSC) completed its long-awaited spinoff transaction Monday. The private sector businesses of the Northern Virginia-based defense contractor and consulting company now trade on the NYSE as “new” CSC (symbol remains CSC), while its Federal technology services spinoff unit, CSRA (CSRA), trades as an independent public company on the NYSE as well.

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As the transaction completed, CSRA also completed its merger activities with SRA International which now becomes part of CSRA. CSRA has also readjusted its levels of indebtedness as a result of the transaction.

Holders of “old” CSC shares on the transaction record date are receiving a previously announced special dividend of $10.50 per old CSC share.

New dividend levels have also been announced by each company, according to a published announcement:

“CSC’s Board of Directors has declared a regular quarterly cash dividend of $0.14 per share on CSC common stock. The dividend will be paid on January 26, 2016 to CSC stockholders of record at the close of business on January 5, 2016. CSRA’s Board of Directors has declared a regular quarterly cash dividend of $0.10 per share on CSRA’s common stock. The first quarterly dividend will be paid on January 26, 2016 to CSRA stockholders of record at the close of business on January 5, 2016.

“Stockholders who continue to hold both CSC and CSRA shares will receive an increase in quarterly cash dividend of approximately 4 percent from the previous quarterly cash dividends paid by CSC.”

In other news for CSRA shareholders,

“CSRA’s Board of Directors authorized up to $400 million for future repurchases of outstanding shares of its common stock, from today’s date through March 31, 2019.”

“Old” CSC shareholders who stayed around to obtain the post-split shares of CSC and CSRA plus the special dividend will find themselves up nicely from “old” CSC’s closing price on Friday, November 27, when the stock closed at $68.62 per share.

As of approximately 11 a.m. Monday morning, November 30, “new” CSC shares are trading at $30.34 per share, while CSRA shares are trading at $31.60. Totaling CSA and CSRA, we arrive at an equivalent “old” CSC share value of $61.94. Adding in the $10.50 special dividend, we arrive at a total value of $72.44 for current shareholders of the post-spinoff stock, or an increase of approximately 5.5 percent over Friday’s close.

In related news, the CSC spinoff transaction has resulted in changes to at least two stock indexes. According to an announcement from S&P Dow Jones Indexes, CSRA replaces CSC in both the GovCon Index and in the widely followed S&P 500 index, effective Monday morning. Also on Monday, “new” CSC shares will move to the S&P MidCap 400 index.

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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17