October 03, 2008
- Xchanging announces that it has today agreed to acquire 75% of the fully diluted share capital of Cambridge Solutions from a group of Cambridge Solutions’ major shareholders (the “Acquisition”). Cambridge Solutions, with approximately 4,500 employees, is an international BPO and IT services provider with a global presence through offices in eight countries across four continents. Cambridge Solutions provides its services to a blue-chip customer base and is listed on the Bombay, National, Madras and Ahmedabad stock exchanges in India.
- The consideration for the Acquisition will be approximately £83 million, comprising Rs 3,712 million in cash (equivalent to approximately £45 million at current rates) and the issue of 15,249,998 New Xchanging Shares. The New Xchanging Shares amount to 7% of the Company’s current issued ordinary share capital.
- The Acquisition is consistent with our strategic objectives and the dynamics of the BPO market, and represents the next step in Xchanging’s development, delivering a number of unique benefits. The addition of Cambridge Solutions to Xchanging delivers greater scale, broader international reach and a number of platforms for significant future growth. In particular, the Acquisition brings the following strategic advantages:
- processing capabilities and a strong market presence in the USA, which can serve as a springboard for future growth;
- the addition of scale to Xchanging’s Indian BPO platform and the creation of offshore critical mass;
- the addition of a strong Australian business and a platform for Xchanging’s growth in the region;
- the addition of scale and the enhancement of the Xchanging Group’s IT capabilities; and
- the opportunity to create a truly international insurance processing business with significant combined revenues.
- Cambridge Solutions and Xchanging have enjoyed a successful commercial relationship for two years, under which Cambridge Solutions provides services through its Indian operation to Xchanging Broking Services. Therefore, Xchanging knows Cambridge Solutions well and has a keen insight into the quality of the business and its people and the areas that can be improved by Xchanging’s approach and methodologies.
- Xchanging believes that the Enlarged Group will be well positioned to benefit from the global trends affecting the BPO market and to provide the cost and efficiency benefits that its customers are seeking.
- The Enlarged Group will have a global footprint which will allow it to access significant new sales opportunities which should generate incremental revenues.
- Xchanging expects that the Acquisition will be accretive to earnings before one-off costs in the first full year after Completion. It expects the Acquisition will generate returns in excess of Xchanging’s cost of capital from 2010 onwards.
- In compliance with Indian law and as a consequence of the Acquisition, Xchanging will make an Open Offer to acquire up to 20% of the fully diluted voting share capital of Cambridge Solutions. Any Cambridge Solutions Shares acquired under the Open Offer will reduce the number of Cambridge Solutions Shares to be acquired from the major shareholders, as will any reduction in the fully diluted share capital of Cambridge Solutions in the period to Completion. Therefore, at Completion this will result in Xchanging owning 75% of the fully diluted share capital of Cambridge Solutions.
- The Acquisition is conditional on receiving the approval of Xchanging Shareholders. Details of a meeting convened to seek this approval will be set out in a circular which will be sent to Xchanging Shareholders in due course.
- A presentation will be held for investors and analysts on Monday 6 October 2008 at 9:15am at Xchanging's offices, 34 Leadenhall Street, London, EC3A 1AX.
David Andrews, Chief Executive Officer of Xchanging said:
“This is a unique opportunity to accelerate our strategy to create a global business processor at a time when our industry is internationalising."
“We will be able to offer customers both global reach and a proven track record in business processing and IT.”
ENQUIRIES:
Xchanging plc
Meeta Thareja, Communications
Tel: +44 (0) 20 7780 6999
Tulchan (PR Adviser to Xchanging)
David Allchurch
Stephen Malthouse
Tel: +44 (0) 20 7353 4200
MWW Group (U.S. PR Adviser)
Sarah Malinowski
Joseph Ferrary
Tel: (201) 507-9500
Xchanging is a fast growing international, pure play business processing company with blue-chip customers. Xchanging provides complex industry specific processing to the banking and insurance industries and procurement, finance and accounting, and human resources services to customers across industries. www.xchanging.com
Citigroup Global Markets Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as exclusive financial adviser and joint broker to Xchanging and no one else in connection with the Acquisition and will not be responsible to anyone other than Xchanging for providing the protections afforded to its clients nor for providing advice in relation to the Acquisition.
UBS Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as joint broker to Xchanging and no one else in connection with the Acquisition and will not be responsible to anyone other than Xchanging for providing the protections afforded to its clients nor for providing advice in relation to the Acquisition.
About Cambridge Integrated Services
Headquartered in Greenwich, Connecticut, Cambridge Integrated Services, a subsidiary of Cambridge Solutions Ltd., is one of the leading independently owned property and casualty claims and risk management services providers. Cambridge serves Fortune 500 self-insured employers, insurance carriers and public entities in the U.S., Europe and Australia. Claims services span workers' compensation; general, auto, professional and product liability; property and assumed/ceded reinsurance. Cambridge also offers a wide array of specialty risk management services including outcomes management and audit consulting, managed care, special investigations, structured settlements and subrogation/recovery services.
About Cambridge Solutions Ltd.
Cambridge Solutions Ltd. (USHQ: Greenwich, CT.) is a strategic global outsourcing firm with deep expertise in:
- IT business consulting, application implementation, software engineering, maintenance and support services
- Business process outsourcing (BPO) for insurance, banking and financial services companies; process consulting; transaction processing, finance and accounting back office support; claims and risk management services; inbound and outbound contact centers to support all of these activities; and other processes that require knowledge-based decision making.
The company employs more than 4,400 professionals serving customers on four continents through more than 60 locations worldwide. With offices in the U.S., Europe, India, Singapore and Australia, Cambridge serves Fortune 500 firms, insurance and financial services companies, and public entities around the world. The company’s BPO subsidiary was named one of the top three best performing BPO companies by Global Services media and neoIT in 2006 and 2007, ranked as one of the top three leaders in human capital management, and ranked as the 28th leading outsourcing company in the world in the International Association of Outsourcing Professionals (IAOP)’s “2006 Global Outsourcing 100” list, that appeared in a special advertising section in Fortune magazine. The company is listed on the major stock exchanges of India (BSE, NSE, MSE & ASE) under the ticker “CAMBRIDGE”. For more information, visit: www.cambridgeworldwide.com.
