Convergys takes over Stream Global for P36 B from Ayala group
More News from Doris C. Dumlao
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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