AYALA Corp.’s BPO investment company, LiveIt Investments Ltd., has announced that its investee company EGS Corp., the indirect parent company of eTelecare Global Solutions Inc., has entered into a definitive agreement to combine with Stream Global Services Inc., (NYSE/Amex:OOO), in a stock-for-stock exchange.
In the process, a global BPO services company with nearly $1 billion in projected revenue in 2010, and about 30,000 employees, will be created.
The current Stream and EGS Corp. stockholders will own approximately 57.5 percent and 42.5 percent, respectively, of the combined entity. The boards of directors and principal stockholders of both Stream and EGS Corp. have unanimously approved the combination. They include Ares Management LLC and certain founding Stream stockholders representing 90.2 percent of the Stream’s outstanding shares, as well as LiveIt and Providence Equity Partners LLC, who together own 100 percent of EGS Corp.
The combination of Stream and eTelecare, which generated revenues of $523 million and $299 million respectively in 2008, will create a global BPO leader with 30,000 employees located in 50 solution centers in over 20 countries in North America, Europe, the Philippines, Latin America, India, the Middle East and Africa. The combined company, to operate under the Stream Global Services name globally, and under the eTelecare brand in the Philippines, will have a broadly diversified Fortune 1000 customer base, a very experienced executive team, and technical and product leadership across a wide range of industries, including the technology, retail, entertainment, media, telecommunications and financial service sectors. It will draw upon the service strengths of each business’s integrated service offerings, which range from revenue generation, to customer care and technical support, to warranty, email and chat services.
Fernando Zobel de Ayala, president of Ayala Corp., stated, “Ayala Corp. believes that the combination of a world-class company like Stream, with a Philippine leader like eTelecare, will create one of the largest and most competitive companies in the global BPO industry, which will be uniquely positioned to deliver a full range of market leading solutions to our clients. The combination also underscores our belief that the Philippines is playing an increasingly critical role in the outsourcing strategies of global clients, due to its many advantages, such as a large and high quality workforce and robust infrastructure.”
John Harris, president and chief executive officer of eTelecare, said, “This is a very exciting time in the evolution of eTelecare, and enables it to be able to deliver a truly global service offering to our clients. This combination fulfills our strategic vision of extending our delivery capability throughout North America, Europe, Asia, Latin America and Africa. The eTelecare team is extremely excited about joining Stream to create a leading global BPO company.”
Gilbert Santa Maria, who will continue to lead eTelecare’s Philippine operation, will play a pivotal role in the integration of the two companies’ operations in this market. The combined company will employ approximately 10,000 from eTelecare and 1,500 from Stream in the Philippines. Mr. Santa Maria said, “We are very positive about this combination, as it will strengthen our presence in the Philippines, and enhance our ability to achieve industry-leading service levels and operating efficiencies for our clients. It also means stronger revenue growth for our operations here, and as a result, more career opportunities for our people, and more jobs for the country.”
Alfredo Ayala, chairman of eTelecare and CEO of LiveIt, added that, “Stream is led by Scott Murray whom I have known for several years as a very well regarded leader in the BPO industry. He and his executives took over the leadership of Stream in the second half of last year, and have rapidly achieved excellent performance for their clients, as well as a near doubling of Ebitda in the first half of 2009. We and our partners at Providence are looking forward to working with Scott, his team and Ares, to create significant long-term value for our clients, employees and stockholders.”
Murray will continue to be chairman and CEO of the parent company, Stream Global Services, following the close of the combination. Alfredo Ayala will become the Non-Executive Vice Chairman of the Board of Directors of Stream Global Services and will remain the Non-Executive Chairman of the company’s Philippine entity. Of the 10 members on the new Board, Ares will appoint three directors and one independent director. Ayala and Providence will together also appoint three directors and one independent director. The remaining two directors will be Mr. Murray and a third independent director. Stream’s corporate headquarters will continue to be in the Boston area in Wellesley, MA following the closing. Ares, Ayala (through LiveIt) and Providence will own approximately 45.5 percent, 25.5 percent and 17.0 percent respectively, of the combined company. Mr. Murray will own approximately 5 percent of the combined company.
The transaction is subject to customary closing conditions, including the submission of an information statement with the Securities & Exchange Commission and normal regulatory approvals including clearance under the Hart-Scott-Rodino Antitrust Improvements Act. As the requisite majority of stockholders of each company have approved the issuance of shares in the combination of Stream with EGS Corp., the combination will not require further approvals of any other stockholders of either Stream or EGS Corp. The transaction is expected to close in September 2009.
About Stream Global Services:
Stream Global Services is a premium provider of customer care and business process outsourcing (BPO) services for the brand-driven Fortune 1000. A global firm, with more than 16,000 employees based out of 35 service centers in 20 countries, Stream is a trusted advisor to some of the largest technology, retail, entertainment/media, telecommunications and related companies in the world. Its service programs, including technical support, sales service, customer retention and revenue generation, are delivered through very disciplined processes used by a highly skilled workforce. Stream continues to expand its global presence and service offerings to increase brand loyalty, revenue and business performance for organizations across the globe. To learn more about the company and its complete service offerings, please visit www.stream.com.
About eTelecare:
eTelecare Global Solutions is a leading provider of business process outsourcing (BPO) services focusing on the complex, voice and non-voice based segment of customer care services. The company provides a wide range of services, including technical support, customer service, sales, customer retention, chat and email, from both onshore and offshore locations. Services are provided from delivery centers in the Philippines, United States, Nicaragua, and South Africa. Additional information is available at www.etelecare.com.
About Ares Management LLC.:
Ares Management is an SEC-registered investment adviser and alternative asset manager with total committed capital under management of approximately $29 billion as of June 2009. With complementary pools of capital in private equity, private debt and capital markets, Ares Management has the ability to invest across all levels of a company’s capital structure – from senior debt to common equity – in a variety of industries in a growing number of international markets. The Ares Private Equity Group has a proven track record of partnering with high quality, middle-market companies and creating value with its flexible capital such as Stream Global Services, Inc. Other notable current investments include General Nutrition Centers, Inc., Hanger Orthopedic Group, Inc. (NYSE: HGR) and Maidenform Brands, Inc. (NYSE: MFB). The firm is headquartered in Los Angeles with approximately 250 employees and professionals located across the United States and Europe. For more information, visit the Ares website at www.aresmgmt.com.
About Providence Equity Partners:
Providence Equity Partners is the leading global private equity firm specializing in equity investments in media, entertainment, communications and information companies around the world. The principals of Providence manage funds with approximately $22 billion in equity commitments and have invested in more than 100 companies operating in over 20 countries since the firm’s inception in 1989. Significant investments include Aditya Birla Telecom, Bresnan Broadband Holdings, Casema, Com Hem, Digiturk, Education Management Corporation, eircom, Freedom Communications, Hulu, Idea Cellular, Kabel Deutschland, Metro-Goldwyn-Mayer, NexTag, Ono, Open Solutions, PanAmSat, ProSiebenSat.1, Recoletos, TDC, Univision, VoiceStream Wireless, Warner Music Group, Western Wireless and Yankees Entertainment and Sports Network. Providence is headquartered in Providence, RI (USA) and has offices in New York, Los Angeles, London, Hong Kong and New Delhi. Additional information is available at www.provequity.com.
About Ayala Corporation:
Ayala was founded in 1834 and is the holding company of one of the largest and most diversified business groups in the Philippines, with interests in real estate, financial services, telecommunications, electronics, and information technology. LiveIt is its holding company in the BPO sector, with significant holdings in eTelecare, Integreon and Affinity Express. Additional information is available at www.ayala.com.ph.
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