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Re:

CSC Acquired ServiceMesh to Add Enterprise Cloud Management

CSC’s 2013 acquisition of ServiceMesh added enterprise cloud-management capabilities, with $163 million paid at closing and $119 million contingent on revenue targets.
From TheFinanceBase Team2 min to read
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Computer Sciences Corporation (CSC) acquired privately held ServiceMesh on November 15, 2013, for an estimated total of $282 million. CSC was buying enterprise cloud-management software and expertise: tools intended to help clients migrate applications and coordinate deployment, governance, and monitoring across private, public, and hybrid cloud environments.

What CSC acquired

ServiceMesh was an enterprise cloud-services-management company headquartered in Santa Monica, with operations in the United States, Australia, and the United Kingdom. CSC described the acquisition as a way to help clients move applications into cloud environments and automate how those applications were deployed and managed. CSC’s 2014 Form 10-K records the acquisition; its 2014 fiscal-year third-quarter Form 10-Q gives the stated rationale.

How much CSC paid

CSC’s 2014 Form 10-K reported total estimated consideration of $282 million. The payment was split between money paid at closing and contingent consideration tied to contractually agreed revenue targets:

Component Amount Terms
Paid at closing $163 million Included $10 million used to retire ServiceMesh debt.
Contingent consideration $119 million Payable subject to contractually agreed revenue targets.
Total estimated consideration $282 million Reported by CSC in its 2014 Form 10-K.

These are historical transaction figures, not a current ServiceMesh price or valuation. See the Form 10-K’s purchase-consideration disclosure.

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What ServiceMesh cloud management was designed to do

CSC presented ServiceMesh as an orchestration layer for enterprise applications spread across different cloud environments. In an October 30, 2013 earnings-call exhibit, CEO Mike Lawrie said: “ServiceMesh enables CSC to integrate and orchestrate enterprise applications across many different cloud environments, including our own Biz Cloud, VMware, Microsoft Azure, Amazon Web Services, and many others.”

The company associated the platform with a set of operational controls for organizations managing those environments:

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  • Multi-provider orchestration: coordination across CSC BizCloud, Amazon Web Services, VMware, Microsoft Azure, and other environments.
  • Migration and deployment automation: support for moving applications into cloud settings and automating their deployment and management.
  • Governance and policy enforcement: controls intended to apply organizational rules across cloud workloads.
  • Service and security choices: tiered service levels and security options.
  • Self-service and monitoring: self-service provisioning alongside real-time monitoring.

These are capabilities CSC described around the 2013 transaction, rather than a claim about what a current product offers. The acquisition announcement’s capabilities and Lawrie’s remarks appear in CSC’s Q2 FY2014 earnings-call transcript exhibit; the later 2014 Form 10-K also discusses multi-vendor hybrid-cloud orchestration.

Why CSC bought the company

The deal added cloud-management capabilities to CSC’s enterprise services business. Rather than limiting clients to one cloud provider, ServiceMesh was intended to let CSC help coordinate applications across private, public, and hybrid environments. The strategic value, as CSC described it, was combining migration assistance with automation and controls for ongoing deployment and management.

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What the historical record does not establish

The cited SEC filings establish the 2013 acquisition, its consideration structure, and the capabilities CSC attributed to ServiceMesh at the time. They do not establish whether ServiceMesh remains a standalone product, its present ownership, current pricing, or an active channel for purchasing it. This is a historical business acquisition, not a current consumer cloud-service offer.

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