Convergys to buy Stream from Ayala and partners for $820M

MANILA, Philippines – Customer management services provider Convergys Corporation is buying rival Stream Global Services Inc. from owners, including Ayala Corporation for $820 million.

The deal will expand Convergys’ client base, strengthen its global presence and bring total company revenue to over $3 billion, making it the second-largest industry player in the world, it said in a statement on Tuesday, January 7.

The company added the deal will give it an additional 35 cents earnings per share, excluding one-time charges, in the first 12 months after close.

“This acquisition is an important step forward in our plan for strategic growth and value creation,” said Andrea Ayers, president and CEO of Convergys. “We believe this combination will strengthen Convergys by diversifying our client base and enabling us to offer a wide range of customer transactions in a more cost-effective manner from multiple geographies, at scale.”

Convergys will buy Stream from LiveIt, the business process outsourcing unit of Ayala, Ares Management and Providence Equity Partners.

Ayala, in a disclosure to the Philippine Stock Exchange on Tuesday, said LiveIt will realize about $145 million in proceeds from the sale of its 29% stake in Stream. Ayala itself will book a net gain of $46 million. The transaction is expected to close in the first quarter, subject to certain conditions.

“Our partners and we are pleased with this transaction, which we believe has strong strategic rationale,” LiveIt CEO Fred Ayala said.

“We believe the global IT-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.”

Convergys said it will finance the deal with $400 million cash, a new $350-million term loan committed by Citigroup Global Markets Inc. and BofA Merrill Lynch, as well as existing credit facilities. – Rappler.com

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