SYNNEX Corporation (NYSE: SNX), a leading business process services company, today announced the completion of the initial close of the acquisition of IBM’s customer relationship management (CRM) business on January 31, 2014. IBM’s CRM business will be combined with Concentrix, a wholly-owned subsidiary of SYNNEX, to become one of the world’s foremost customer engagement services companies in the $55 billion+ CRM BPO market. The Company also announced that Christopher Caldwell has been promoted to Executive Vice-President and President of Concentrix Corporation, and will lead the combined organization. “This transformational acquisition makes Concentrix a global Top 10 player in a growing market,” stated Kevin Murai, President and CEO of SYNNEX Corporation. “Our collective strengths in the CRM BPO market including a strong team of executives and recurring revenues from IBM’s blue-chip client base have created a truly compelling value proposition for our shareholders.” Concentrix is now a global leader in customer engagement, technology and process innovation, due to the combined scale, tools and industry expertise of IBM and the agility, flexibility, velocity and client focus of Concentrix. Through this acquisition, as well as the ongoing, long-term strategic partnership with IBM as preferred provider for CRM solutions for their clients, Concentrix will provide organizations with the innovative solutions and customer engagement capabilities to differentiate their brand and services from those of their competitors. “Enabling our clients’ customer strategy and supporting transactions with operational excellence has always been the foundation of our success. This acquisition continues to extend our portfolio, delivery capabilities and geographic reach to help organizations around the world deliver innovative, high-value interactions at every stage of the customer engagement lifecycle” said Chris Caldwell, President, Concentrix Corporation. “Upon final closing, Concentrix will provide customer engagement and industry process services for clients in 10 industry verticals with an expanded global footprint of more than 43,000 staff in over 36 countries.”
Estimated Financial Impact of Acquisition to Consolidated SYNNEX Corporation Financials:
- Approximately $120 million of EBITDA weighted towards the latter part of the first 12 months following the initial close due to a higher cost structure in the near term as the business moves from IBM to Concentrix. The amount excludes one-time acquisition related expenses and restructuring charges.
- One-time acquisition-related expenses - primarily professional fees and transaction-related expenses -are estimated at $35-45 million for the fiscal year end November 30, 2014.
- Amortization expense is estimated to be $40 million for fiscal 2014.
- Depreciation expense is estimated to be $15 million for fiscal 2014.
- As part of the $505 million purchase price, SYNNEX has delivered approximately 1.27 million shares of SYNNEX common stock valued at $75 million to IBM.
- Interest expense related to the financing of the initial $355 million cash purchase price and working capital needs will approximate $8-10 million for the balance of fiscal year 2014. $75 million of the purchase price payment is deferred until subsequent closings are completed.
- Total revenues from the IBM CRM business will be dependent on the timing of successive closings, the timing of novation of customer contracts, and the fact that some contracts will be conducted under sub-contract from IBM. We expect, however, that successive closings and novation will occur within the next 12 months. Updated U.S. GAAP revenue projections from this transaction will be provided during the Company’s first quarter 2014 earnings release and in subsequent quarters.
- Excluding one-time acquisition related charges, the one month impact of the IBM CRM business will not be material to SYNNEX’ fiscal first quarter results for the period ended February 28, 2014.
- “About Concentrix” and recent news releases at http://www.concentrix.com/
- Acquisition-related news releases and presentation from the initial September 10, 2013 acquisition announce and November 27, 2013 financing announce at the SYNNEX Investor Relations Site at http://ir.synnex.com/
- Follow Concentrix and SYNNEX on Twitter, Facebook and LinkedIn from the “Social Communities” section of the SYNNEX Global Site at http://www.synnex.com/
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