Essar group's Aegis buys US BPO firm for $250 million

05 August 2008

Essar Group BPO operation Aegis has acquired the Nasdaq-listed US offshore BPO provider, PeopleSupport, based in Los Angle in a $250-million deal to combine the acquired firm with itself into a new entity. The deal will be funded through internal accruals of the Essar group.

Aegis, which has acquired 10 other companies in the past four years, will pay PopleSupport shareholders through Essar Services (Mauritius). The merged Aegis PeopleSupport, with 6,500 PeopleSupport employees and 20,000 from Aegis, will have revenue enhancement of $147 million.

PeopleSupport which is focused on travel and consumer, financial, healthcare and insurance, technology and telecom and media had added transcription and captioning services through the acquisition of 'Rapidtext' and 'The Transcription Company' in 2006.

According to a joint statement, Aegis will pay PeopleSupport shareholders $12.25 per share, a 29 per cent premium to the closing share price on 1 August 2008 will equal 1.7 times PeopleSupport's earnings. This buyout will come with a cash reserve of  $160 million, which PeopleSupport currently has.  

 PeopleSupport had revenues of $147 million for the year ended March 2008, and Aegis $320 million for the same period.

With this acquisition, Aegis will have access to PeopleSupport's 15 major US-based clients and its three delivery centers in Philippines and one in Costa Rica thus enabling it to emerge a giant in the international BPO market with onshore, nearshore and offshore BPO services.