PHILIPPINES--U.S. business process outsourcing (BPO) company PeopleSupport has turned down an acquisition bid from Philippine technology company IP Ventures Group (IPVG), calling the merger offer "inadequate".
IPVG and investment house AO Capital Partners last week initiated an all-cash offer to buy Nasdaq-listed PeopleSupport at a target value of US$355 million, or US$15 per share. The majority of PeopleSupport's employees are based in the Philippines.
However, in a statement released Thursday, the BPO services provider said its board of directors has "unanimously determined...the unsolicited US$15-per share cash proposal to acquire PeopleSupport is inadequate and fails to take into account PeopleSupport's strategic value and success in implementing its growth strategy".
PeopleSupport CEO and Chairman Lance Rosenzweig said: "After a careful and thorough review of the proposal, the board concluded that the proposal is not in the best interests of PeopleSupport or its shareholders." With over 8,000 seats, the company is one of the biggest contact centers in the Philippines.
Frank Perna, spokesperson for PeopleSupport's board of directors, added that IPVG's proposal does not "merit further attention".
The BPO company said it has instituted numerous moves to strengthen its financial standing throughout 2007. These efforts include realigning operations along industry verticals, growing its sales pipeline to the most robust level in its history, reconfiguring seats for the purpose of increasing operational efficiencies and productivity, and establishing an effective Philippine peso-foreign currency program.
PeopleSupport said these initiatives are already paying off. As of Sep. 30, it stated, company revenues were up 33 percent for the first nine months, and 23 percent for the third quarter of 2007.
Its attrition rate, defined as voluntary staff resignations after a six-month probationary period, fell to 5.5 percent in the third quarter of 2007 from 8.8 percent in the previous quarter.
For the company's full fiscal year ending Dec. 31, 2008, PeopleSupport expects its revenue to be between US$180 million and US$190 million based on existing customer base and new sales pipeline. Operating income, assuming an average Philippine currency rate of 41 pesos to the US dollar, is expected to be in the range of US$8.1 million to US$11.6 million, the company said.
By end-2008, PeopleSupport's production seat count is also expected to be clock at 9,000.
Joel D. Pinaroc is a freelance IT writer based in the Philippines.