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Essar To Buy 59.13% In Avaya Unit For Rs 206Cr

31 May, 2010

In yet another instance of consolidation in the BPO space, diversified Essar Group is acquiring majority stake in the India unit of global BPO firm Avaya Inc for around Rs 206.3 crore. The target, AGC Networks Ltd, is an enterprise communication solution firm, and is part of listed Avaya GlobalConnect Ltd.

Essar is already a dominant player in the BPO space with its unit Aegis Ltd, an acquisition-savvy firm which has concluded over a dozen deals.

Avaya’s unit AGC is a provider of intelligent communications (IC) solutions focused on large and mid-sized enterprises across several industry verticals. With 500 employers in its fold, its services are used to accelerate revenue growth, increase market penetration, optimize operating costs and improve employee productivity.

Essar is acquiring 59.13% stake in AGC, and has entered into a share purchase agreement with the promoters of the company, Sierra Communication International Llc and Avaya Mauritius Ltd, who together hold 59.13% stake. Essar has signed the agreement through its units — Essar Service Holdings Ltd (ESHL) and Essar Capital Finance Pvt Ltd (ECF). Edelweiss Capital has acted as advisor to the transaction.  

ECF will also make a mandatory open offer to the public shareholders of the company for acquiring an additional 20% stake in AGC Networks, Avaya said in its communiqué to the BSE.  

Essar’s BPO entity Aegis Ltd has over 40,000 employees across 43 locations serving verticals such as BFSI, telecom, healthcare, travel & hospitality, consumer goods, retail and technology.

This will be the 14th acquisition by Aegis and the second this fiscal. Very recently, it acquired a customer service center in Killeen, Texas from US-based education finance service provider Sallie Mae adding 350 employees to its global delivery platform. 

Aegis will also acquire the Australian and New Zealand operations of Avaya, besides the India unit, according to a report in Mint.

There have been quite a few global deals in the BPO space in recent times.  In one of the major inbound M&As in India in recent times, Sutherland Global Services, a transnational business process outsourcing (BPO) company, acquired Mumbai-based Adventity Global Services early this month. While in outbound deals, Aditya Birla Minacs acquired Compass BPO Ltd, Intelenet Global Services acquired Firstinfo Ltd, and Patni Computer Systems Ltd acquired CHCS Services Inc.

AGC Networks stocks were traded at Rs 256.50, down by Rs 21.85 or 7.85% at 2:30 pm in the BSE today. At the prevailing prices, it has a market capitalization of Rs 364.73 crore. 

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Essar To Buy 59.13% In Avaya Unit For Rs 206Cr

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