Convergys to take final bids, sources say - MergerMarket.com
Convergys [NYSE:CVG], the call center operator exploring a sale, has indicated that final bids are due early next week, said two sources briefed on the situation.
Apollo Global Management has been pursuing the company, these sources said. This news service reported earlier this week that the sale process for Cincinnati-based Convergys has seen limited suitor interest for the company, including from financial sponsors, on the back of its weak financial performance.
The two sources said that to their knowledge a couple of strategics did table initial round bids for Convergys earlier on in the sale process. They noted that preliminary bids came in the low USD 20s per share range. At this point, though, the strategic interest appears to be tepid, one of the sources said.
Convergys shares closed on Friday at USD 23.69 per share after declining this week following the report by this news service. The USD 2.25bn enterprise value company trades at around 6.9x projected 2018 EBITDA compared to 7.25x prior to the report.
A buyout of Convergys is likely to be a tough one to execute on given the business outlook for the company.
Last week, Convergys reported a 10% drop in 1Q18 revenue on a constant currency basis as revenue from its top two customers declined. The call center operator forecasts that overall 2018 revenue will fall by 7% on the same basis. Last year, revenue decreased by 4% to USD 2.8bn.
The previous report noted that since Convergys is a turnaround story, the company is a better fit for a financial sponsor or sponsor-backed company, than a trade buyer.
The Wall Street Journal reported after the earnings announcement that Convergys was far along in the sale process and was talking to PE firms and strategics. The newspaper said Convergys started considering options after CEO Andrea Ayers announced plans in January to depart.
The outsourcing group is being advised by longtime adviser Centerview Partners on the sale, as reported.
Elliott Management disclosed a 4.9% stake in Convergys at the end of last year and continued to own the same number of shares at the end of March, according to SEC filings. The activist investor has not filed a 13-D outlining any demands on the company.
Convergys did not return a request for comment. Apollo declined to comment.