The Deal: Synnex Nabs IBM Customer Care Business

THE DEAL (The Deal) -- Outsourcing technology company Synnex  (SNX) announced Tuesday, Sept. 10, that its Concentrix subsidiary acquired the worldwide customer care service business of IBM  (IBM) for $505 million.

Terms of the deal call for a $430 million cash payment and $75 million in Synnex common stock to Armonk, N.Y.-based IBM. The acquisition should add about $120 million in Ebitda and about 55 cents in fully diluted earnings per share excluding one-time charges and integration costs in the first year after the deal's closing.

The deal values the target at about 4.2 times EBITDA. 

"Concentrix will become one of the world's leading customer relations management BPO companies with expected combined revenues of $1.4 billion and about 45,000 employees worldwide," said Synnex CEO Kevin M. Murai on a conference call held after the market close on Tuesday. "It will boast a high-quality customer portfolio with recurring revenues from IBM's blue-chip client base that are well diversified across industry verticals and geographies." 

Fremont, Calif.-based Synnex bought Concentrix in September 2006 for undisclosed terms. The target is a marketing company that provides call center, database analysis and printing services to the transportation, publishing and banking industries. It has a revenue run-rate at over $200 million, Murai said on the call. 

The IBM business is considered the larger entity and the Concentrix operations will be folded into it, while retaining its brand name.

Concentrix president Chris Caldwell will lead the target with senior management coming across from IBM, and from Concentrix staff, executives said on the call.

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