Last month witnessed the lowest Merger and Acquisition (M&A) activity in global IT/Business Process Outsourcing (BPO) sector in the last twelve months. There were only 25 deals announced in the month totaling to over $300 million worth of transactions. Of these 25, only one transaction was a three digit million dollar worth and only one was two digit million dollar worth. All the rest were single digit million dollar transactions. About five of these transactions were in the e-learning services space.
Largest transaction of the month was Fujistu, a leading Japanese IT and Communications solutions provider, acquiring one of the largest Australian IT-services Company Kaz Group for $200 million from Telstra Corporation. Fujitsu aims to strengthen its Australian presence of its local arm Fujitsu Australia and New Zealand through this 100 percent acquisition of the wholly owned subsidiary of Australian Telecom major Telstra Corporation.
The other large deal was ACS acquiring e-Services to strengthen their customer care and BPO capabilities for $85 million in full cash. Caribbean based e-Services Group International’s last twelve months revenue was $65 million making the deal as expensive as 1.3x of Revenue. This deal synergizes from the global and diversified customer care cum BPO offerings of e-Services and the strong clientele of ACS. With this transaction, ACS adds 4,000 employees to its 70,000 stable.
Close to one-third of the transactions in the last month were sell outs by holding parents indicating that the parent companies are selling their IT/BPO arms to utilize the proceeds to focus on their core businesses.
Last month, quite a few small players participated on the buy-side and joined the race of bottom fishing along with the larger players.