Eagan Co. Sold To Competitor For $820M

Eagan Co. Sold To Competitor For $820M

Call center rivals Stream Global Services and Convergys Corporation are expected to combine in the first quarter of 2014, which would create a company with about 125,000 employees at 135 different facilities.

Convergys Corporation announced Monday that it will acquire Stream Global Services, Inc., a rival call center company that is based in Eagan, for $820 million.
Stream provides sales, customer service, technical support, and other outsourcing services for Fortune 1000 companies. Stream—which reported $860 million in 2012 sales, up 2 percent from the prior year—went private last year and is now owned by private equity firms Ares Management, Providence Equity Partners, and Ayala Corporation.
Convergys said it will pay for the company through $400 million of cash on hand and with a portion of a $350 million loan it plans to take out from Citigroup Global Markets, Inc., and Bank of America Merrill Lynch.
Stream has about 55 facilities in 22 countries and employs nearly 40,000 people, including about 350 in Eagan.

Cincinnati-based Convergys said it expects the total revenue of the combined company to be more than $3 billion, which it claims would make it the second-largest customer management services provider in the world.
Convergys said the transaction will add about $0.35 in diluted earnings per share in the first year after the deal closes. The deal is expected to close in the first quarter of 2014.

“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 [earnings per share] growth,” Convergys CEO Andrea Ayers said in a statement. “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.”

After the deal closes, Convergys expects to have about 125,000 total employees at 135 call centers in 25 different countries. Convergys said it will establish a new management team composed of members from both companies. The deal is expected to save Convergys about $25 million in expenses.

Stream was on the opposite end of two acquisition deals this year. In August, it purchased a Tunisia-based tech-support firm, to enhance its chat and e-mail service offerings, for an undisclosed sum. And in February, it purchased LMB Holdings Limited—a U.K.-based lead generation and call center company—for $44 million.

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