Synnex expands outsourcing reach with $2.4 billion Convergys deal

(Reuters) - Business process services company Synnex Corp SNX.N said on Thursday it would buy call center operator Convergys Corp CVG.N in a $2.43 billion cash-and-stock deal to expand its footprint in the technology and information services space.

The $26.50 per share offer represents a premium of 4.5 percent to Convergys’ Thursday close. The deal is expected to close by the end of 2018.

Last week, Reuters reported, citing sources, the two companies were in talks for a deal, after Convergys chief executive, Andrea Ayers, stepped down following nearly 30 years at the Cincinnati-based company earlier this year.

“The Convergys Board has secured a strong outcome for shareholders,” Jesse Cohn, partner at hedge fund Elliott Management Corp said in a statement.

“The combination with Synnex will deliver significant accretion, cost benefits and strategic advantages that will create substantial shareholder value.”

Elliott owned 4.9 percent or 4.52 million shares of Convergys, as on March 31, according to Thomson Reuters data.

Convergys is one of the several companies that was spun off from Cincinnati Bell Inc CBB.N and became a separate public entity in 1998.

Its sales for quarter ended March 31 fell 10 percent, mainly due to major clients cutting their reliance on its services.

Fremont, California-based Synnex, which operates in more than 30 countries, said it expects the deal to add to its adjusted earnings per share in the first year, reaching double-digits by the second year.

The company expects cost savings of $50 million in the first year, achieving a minimum of $150 million by the third year.

Centerview Partners was the financial adviser to Convergys, and Wachtell, Lipton, Rosen & Katz its legal counsel. Pillsbury Winthrop was Synnex’s legal adviser.

Shares of Synnex fell nearly 4 percent to $102.99 in after-market trading, while those of Convergys slipped 1.3 percent to $25.05.

Reporting by Vibhuti Sharma in Bengaluru and Liana B. Baker in New York; Editing by Arun Koyyur