Aegis inks pact to merge its biz with StarTek

Our Bureau Mumbai | Updated on March 15, 2018

Deal enables BPO service provider to re-enter US market

Aegis, now a company owned by Singapore-based PE firm Capital Square Partners, has entered into an agreement to merge its businesses with NYSE-listed StarTek.

Following the merger, CSP will own 55 per cent of the combined company and the remaining 45 per cent will be held by StarTek shareholders.

Business process outsourcing services provider Aegis, formerly an Essar Group company, has more than 25,000 employees in India and 40,000 globally. Essar had sold the company to CSP last year. The deal enables Aegis to re-enter US market, which the company exited in 2014 after selling the business to Teleperformance.

“The combination of Aegis and StarTek will create a global enterprise with over 50,000 employees and operations in 12 countries across five continents. The biggest beneficiary in this combination will be our clients, who will enjoy the advantages of our global reach including some of the world’s most rapidly growing markets, multilingual offerings, and the institution of operational best practices across the globe,” said Aparup Sengupta, Chairman of Aegis. Under the agreement, StarTek will issue 20.6 million shares of its common stock in exchange for all the outstanding common stock of Aegis to CSP.

Concurrently, CSP or an affiliate will further increase its investment in StarTek by purchasing 833,333 primary shares of its common stock at $12 per share, representing a $10-million investment. Following the closing of the transaction, the top three customers of the combined company will represent less than 30 per cent of total revenue, compared with 53 per cent for StarTek in 2017. The combined capital structure is expected to include about $180 million of debt.

“The two companies have limited overlapping infrastructure and clients — a combination which helps enhance consistency of results and profitability by reducing client concentration,” StarTek CEO Chad Carlson said.

Aegis had posted $388 million of revenue with $38 million in adjusted EBITDA (a non-GAAP measure) in 2017. StarTek generated about $293 million of revenue, a $1.3-million net loss and $13 million in adjusted EBITDA in 2017.

Published on March 15, 2018

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