Convergys To Buy Stream Global Services, Shares Soar - Update

(RTTNews) - Customer management service provider Convergys Corp. (CVG) has agreed to buy Stream Global Services Inc. for $820 million in cash, aiming to expand its US and global presence. Shares of Convergys soared 16 percent on the news.

Convergys said the combined company is expected to generate revenues of $3 billion and will be the second largest customer management services provider in the world. Cincinnati, Ohio-based Convergys expects the acquisition to be accretive to its earnings by $0.35 per share in the first 12 months after close, excluding one-time items.

"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 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."

The acquisition is expected to close in the first quarter of 2014, subject to customary closing conditions and regulatory approvals.

Stream Global is owned by funds managed by Ares Management and Providence Equity Partners and LiveIt, the BPO investment arm of Ayala Corp.

Convergys intends to finance the deal through $400 million of cash on hand, a new $350 million term loan and existing credit facilities for the balance.

Moving ahead, Convergys continues to expect full-year adjusted earnings from continuing operations to be about $1.10 per share and revenues of around $2.045 billion.

CVG closed Monday's trading at $20.86, down $0.16 or 0.76%, on the NYSE. The stock, however, surged $3.40 or 16.30% in after-hours trade.