Aegis to merge with US-based Startek, CSP to own 55% in the merged entity

Business process outsourcing services company Aegis, a portfolio company of private equity firm Capital Square Partners (CSP) on Thursday said that it has entered into a definitive agreement with US-based Startek as a part of which it will merge with the later in an all-stock transaction.

As a part of the agreement, NYSE-listed Startek will issue CSP 20.6 million shares of its common stock in exchange for all of Aegis’s outstanding shares. Concurrently, the private equity firm will also buy an additional 833,333 shares of Startek. 

Upon the completion of the deal, CSP will own about 55 per cent of the combined company while the rest will be owned by the existing Startek shareholders. CSP will also have the right to appoint a majority of the merged entity’s board of directors. 

“This marks the return of Aegis into the United States and the Philippines, a capability that will allow us to deliver enhanced value to global customers. Startek’s expertise and valued long-term client relationships, including the recent strategic opportunities in e-Commerce, allow us to accelerate our growth and value creation for customers, employees and shareholders as a public entity listed in the NYSE,” said Sandip Sen, Global CEO of Aegis Global.

Last year, Essar Group, the then owner of Aegis had sold the BPO company to CSP in a deal valued at around Rs 20 billion, which marked Essar’s exit from the BPO business. Prior to this, the diversified business group in 2014 had sold Aegis’ businesses in the US, Philippines and Costa Rica to Paris-based Teleperformance for $610 million (around Rs 36.4 billion). Since then, Aegis had stayed away from these markets. 

Aegis which reported about $388 million of revenue with $38 million in adjusted Ebitda in 2017, presently employs around 44,000 employees across 44 BPO centres located in nine countries. 

Startek, which was incorporated in 1996, reported $293 million in revenue with a net loss of $1.3 million in 2017. The combined entity will now have $700 million in revenues with over 50,000 employees with operations in 12 countries across five continents. 

“It is uniquely rewarding for both companies’ shareholders to realize the benefits of greater scale, diversity, access to new markets, and operating synergies that this combination provides,” said Sanjay Chakrabarty and Bharat Rao, Managing Partners’ of CSP in a joint statement. “The combined company will also be able to significantly leverage automation, artificial intelligence and other technology-led innovations to deliver exponential value to customers globally.”