Landon Capital

Buyout firm Apollo Global and Kyndryl Holdings, the IT services spin-off from IBM (NYSE), are reportedly scheming a joint bid for DXC Technology (NYSE), insiders revealed on Monday.

Word on the street is that Apollo and Kyndryl are cooking up an offer between $22 and $25 per share for DXC. The rumor mill sent DXC shares soaring 11% to close at $18.45, pushing the company’s market cap to $3.3 billion.

Meanwhile, DXC, another IT services player, is also fishing for buyers for its insurance software arm, aiming for over $2 billion, but might just stay solo under its new CEO, Raul Fernandez, appointed in February, according to the sources.

Preferring to remain incognito due to the hush-hush nature of the deal, the sources added that neither DXC nor Apollo had any comments, while Kyndryl remained silent.

DXC’s menu includes analytics, engineering, cyber security, cloud infrastructure, and outsourcing to help companies manage their operations. However, the company’s revenue has taken a nosedive over the past year, thanks to high interest rates and economic slowdown fears, prompting their clients to tighten their belts. Consequently, DXC shares have lost over a third of their value in the last 12 months.

In response, DXC has been trimming the fat with cost cuts and restructuring. The Ashburn, Virginia-based company previously flirted with a sale last year but called it off when a private equity suitor couldn’t muster the funds.

Kyndryl, focusing on infrastructure IT services, boasts a market value of $6 billion, while Apollo, managing a hefty $671 billion in assets, is one of the titans in private equity and corporate credit investments.