Despite the stock market melt-down, ER&D vendors have continued to make tuck-in acquisitions in the past two weeks. The acquired firms were of small size and not likely to impact the net debt of their new owners. However, should the Covid-19-China-US trade-war-Stock Markets meltdown-oil price crisis degenerate into a recession, we expect suck tuck-in acquisitions to become scarce.
DXC, the third largest IT service vendor is to acquire Luxoft, a Central and European delivery vendor providing IT and ER&D services. DXC is offering $2bn for Luxoft, which has been struggling this year, being impacted by its high client concentration.