DXC Technology Co. Chairman, President and CEO J. Michael Lawrie said it will continue to be "business as usual" at the company following the announcement of DXC's combination of its U.S. public-sector business with Vencore Holding Corp. and KeyPoint Government Solutions to form a separate, independent publicly traded company.
The formation of the company is expected to be completed by the end of March 2018. The combined company will have about $4.3 billion in combined revenues.
In a call to discuss the deal, Lawrie called it a "unique" combination of assets, adding that it is a vertical integration of the three businesses. The CEO clarified that DXC's capital allocation model will not change.
"We're going to continue to do acquisitions," he said, referencing the company's announcement of an acquisition a day earlier in the service management sector. "We are putting some focus on debt reduction, and we're putting focus on return to our shareholders in the form of stock buybacks."
Lawrie shed some light on the separation into a new company, saying it allows both the new company and DXC to respond to the different growth profiles and capital requirements seen in the public and commercial markets.
"Separating will allow each company to respond to changing markets more flexibly while pursuing long-term strategies tailored to each sector," he said.
CFO Paul Saleh said the estimated margins of the new company will be higher than the current margins for DXC's U.S. public-sector business.