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Convergys sells HR management to NorthgateArinso |
Convergys said it inked a definitive agreement to sell its Human Resources Management (HRM) line of business to NorthgateArinso, a company that provides human resources software and services, for approximately $85 million in cash at closing and $15 million in cash over three years.
NorthgateArinso has its headquarters in the UK and has offices in 31 countries. It delivers services in over 70 countries through a network of eight service delivery centers. NorthgateArinso's has approximately 5,000 staff members, and is reported to have over 20 percent of the FORTUNE Global 500 companies amongst its clients. Convergys' statement said the company ranks amongst the five largest HR service providers in the world.
Convergys and NorthgateArinso said the transaction represents “a unique opportunity” for Convergys' HRM clients and employees of the division to be part of “a larger, dynamically focused entity with a strong record of accomplishment in the HR services business.” NorthgateArinso, according to Convergys' statement, will offer employment to the approximately 2,300 employees of Convergys' HRM line of business. The transaction is expected to close in the second quarter and is subject to customary approvals.
Jeff Fox, president and CEO of Convergys said the transaction provides an opportunity for the company “to focus our investments and efforts on growing our Customer Management and Information Management businesses.”
Convergys said to account for the impact of the sale of the HRM business, it would remove revenues of around $250 million from its 2010 guidance. It is also removing $20 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) and the $0.10 earnings per share (EPS) as an impact related to the HR Management line of business.
Convergys revised guidance for full year 2010 results from continuing operations now counts customer management revenues of approximately $2 billion and Information Management revenues of approximately $350 million. Its revised EBITDA is between $310 million to $340 million, and earning per share of $0.95 to $1.10. The company now expects free cash flow to exceed $150 million, plus an additional cash distribution of approximately $40 million from the Cellular Partnerships.
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