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Convergys takes over Stream Global for P36 B from Ayala group

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Screengrab from http://www.stream.com/

MANILA, Philippines—The US-based Convergys Corp. has hatched a P36-billion deal to buy 100 percent of Stream Global Services Inc., a business process outsourcing (BPO) firm partly owned by the Ayala conglomerate, creating the world’s second largest customer management services provider.

In a disclosure to the Philippine Stock Exchange on Tuesday, Ayala Corp. announced that its BPO investment arm LiveIT Investments Ltd. and its two private equity partners Ares Management and Providence Equity Partners have agreed to sell all shares in Stream to Convergys.

Once the transaction is completed, Convergys expects to have combined revenues of over $3 billion and about 125,000 employees, including more than 53,000 in the Philippines, serving clients in 35 languages at over 135 contact centers in 25 countries.

Stream is 29 percent owned by LiveIT, which will book about $145 million in total net equity proceeds from the transaction, which is expected to close in the first quarter of 2014, subject to satisfaction of customary closing conditions, including receipt of applicable regulatory approvals. Parent conglomerate Ayala, for its part, expects to realize a net gain of around P2 billion ($46 million) through LiveIT.

“Our partners and we are pleased with this transaction, which we believe has strong strategic rationale. We are very proud of the Stream team, and grateful to the thousands of individuals who helped build it from an industry pioneer into a global leader,” LiveIT chief executive officer Fred Ayala said in a press statement.

“We believe that the global IT (information technology)-BPO industry will continue to expand, particularly in the Philippines, where we expect it to remain one of the country’s top generators of new jobs. Consequently, we are continuing to build our investee companies in the high growth segments of the industry, and starting to invest in the education space, which we see as a critical enabler of the IT-BPO industry, given its ever increasing demand for well-trained Filipino talent,” Ayala added.

Stream provides customer relationship management, including technical support, customer care and sales, for Fortune 1000 companies. It serves some of the world’s leading technology, computing, telecommunications, retail, entertainment/media, and financial services companies. It has a multilingual workforce of over 40,000 employees capable of supporting over 35 languages across approximately 56 service centers in 22 countries.

Convergys, which likewise has big BPO operations in the Philippines, has been in the customer management business for over 30 years. By adding Stream’s complementary client base, geographic footprint and service capabilities, Convergys expects the acquisition to expand and strengthen its US and global presence in the $55 billion outsourced customer management services industry.

“This acquisition is an important step forward in our plan for strategic growth and value creation,” said Andrea Ayers, president and CEO of Convergys. “Both Convergys and Stream have a history of commitment to our clients, and dedication to excellence in representing the world’s largest brands. We expect this transaction to be highly accretive and to allow us to leverage our strong balance sheet to position Convergys for enhanced revenue, margin improvement and EPS growth.

“We believe this combination will strengthen Convergys by diversifying our client base and enabling us to offer a wider range of customer transactions in a more cost effective manner from multiple geographies, at scale. Our plan is to build upon the best practices and management teams from both companies to deliver superior customer benefits and enhanced value for our clients and shareholders, and provide new opportunities for our employees,” Ayers said.









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  • Lord_patawad

    “We believe that the global IT (information technology)-BPO industry will continue to expand, particularly in the Philippines…” – Fred Ayala said

    - eh bakit nyo binenta?

  • Baket?

    eTelecare ==> Stream Global ==> Convergys ==> ?

    it started out as eTelecare with its first employee (Pam Wu) back in Dec 1999. then sometime in 2009, stream & the Ayalas acquired eTelecare. now, convergys acquires stream from the Ayalas. to cut the long story short, BPO is not the cup of tea of the Ayalas. in fact, BPO is also not the cup of tea of another oligarch MVP. MVP’s ePLDT Ventus started out way earlier than Convergys, Teletech, Accenture, IBM and the other big BPO outfits providing outsource operations (as opposed to captive). being pioneers in the local BPO industry, both the Ayalas and MVP should have the first-mover advantage. unfortunately, our oligarchs are only good at monopoly, duopoly and rent-seeking industries. in short, they cannot do well in an open leveled playing field wherein they have to be competitive. the foreign BPO companies, although coming in a lot later than our oligarchs, are doing a lot bigger, cheaper, faster and better.

    Lesson learned: our local oligarchs are no good. they are unable to compete in an unregulated industries such as the BPO. they will only do well in telco, power and other utilities and big real estate. what will happen to the uncompetitive oligarchs when all the protected industries are suddenly completely opened to 100% foreign-owned competition? that’s why the Ayalas and MVP spend a lot in election donations to protect their long-term business interests.

    Trivia: the local BPO industry was spawned by the lower data transmission cost brought about by the telco deregulation that happened under FVR’s term in mid 1990s.

    • kapitanvic1

      Baket who are you? Thanks for your posting which is a cut above all others I’ve read.

    • bertrand

      Pero….pero….. di ba ” Kami ang Boss Nya ? ” LMAO !!!

    • kunsabagay

      thanks for providing more context to the news item

    • bertrand

      Let’s be fair and not play favorites. Mention the other
      oligarchs who are screwing the bottom 99 %.



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