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Monday, 26 June 2006 09:18

Indian BPO firm acquires Canadian firm for $125m

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ImageIn one of the largest-ever cross border Indian BPO acquisitions,  TransWorks announced the takeover of Canada-based outsourcing firm, Minacs Worldwide Inc, one of the largest BPO firm in Canada, for $125 milllion in a share and cash deal.

TransWorks, part of the one of the largest Indian corporate groups, the Aditya Birla Nuvo group, said it will initially buy the 46.4% promoters’ equity of Minacs and later make an open offer with the intention to subsequently merge the Toronto-listed company with TransWorks.

The Aditya Birla group is one of the country’s largest and oldest business houses with interests ranging from cement and textiles to commodities and telecom. The acquisition is likely to pitchfork the group into the top three BPO companies in India, chairman Kumar Mangalam Birla said.

The  group’s strategy is to dominate the areas it is in. It acquired TransWorks three years ago, and since then it has grown seven times.

Minacs is Canada’s largest BPO with expertise in automotive, telecom and financial services. Although Minacs has an annual revenue of $265m,  its  offer of $125 million is due to the fact, “that the pace of growth for the BPO business in Canada is slow, ” said TransWorks CEO Atul Kunwar in a news conference on Saturday..

"It’s a profit making company and after the acquisition, we’ll be able to have a combined revenue of about $300m," he added.

TransWorks will acquire Minacs' promoters' stake of 46.4% and will also make an open offer to the shareholders of Minacs to acquire the remaining stake, Birla said.

The entire process is expected to be completed by August.

ReichmannHauer Capital Partners intends to co-invest with TransWorks. "We would be comfortable offering them up to a 10% stake,"  Birla said. The fund requirement of this acquisition would be a combination of debt and internal accruals from Aditya Birla Nuvo and TransWorks.

The combined business of the two companies would have a revenue base of $300 million. "We want to be a dominant player in every field. This acquisition will be a quantum jump for TransWorks. It gives us size and dominance," Birla said.

Minacs provides customised BPO solutions on three core areas of capability — contact centre solutions, integrated marketing services and back office administration. Its strengths are in automotive, technology, telecom and financial services. The automotive segment accounts for 68.5% share of Minacs business; technology and telecom 22%, financial services 6% and general business 3.5%.

"TransWorks is not present in the automotive segment. It gets an entry into this area through this deal," Birla said.

In 2005, Minacs reported revenues of C$290.5 million. It has 6,000 employees across Canada, the US, the UK, Germany and Hungary.

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