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US-based private equity group KKR-owned HR software and services provider NorthgateArinso has acquired the HR management division of US based Convergys for USD100 million. The firm will pay about USD85 million at closing and another USD15 million over three years. The acquisition includes the assets, customer portfolio and global delivery network of Convergys’ HR management division. Convergys HR management division alone has global revenue run rate of about USD250 million and services some major clients like Cadbury, Whirlpool and Shell from India. This takes the total value of the NorthgateArinso-Convergys entity to be around USD900 million.
NorthgateArinso is one of three divisions of Northgate Information Solutions that has been primarily focusing on the UK and European markets. The deal would bring in 20 customers to the firm’s HR BPO customer base and majority of these clients come from the North America. The US market is over a third of the global HR outsourcing market, and North America is part of the delivery scope in the majority of HRO deals.
The firm said it has acquired Convergys in a bid to focus on the US and Asia Pacific region including the Indian market. Darcy Lalonde, executive president for Asia Pacific at NorthgateArinso, said, “Largely, our intention is also to get a foothold in the US market where we were not present. At the same time, we wanted to have a presence in the Indian and Chinese markets, which Convergys has given us.” He added that the integration would take about six months. “We plan to use NorthgateArinso as the brand name for the combined entity. With the completion of the deal, the Convergys brand will not be used for HR outsourcing activity in order to avoid brand confusion in view of Convergys’ other activities focused around customer care,” Lalonde added.
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