Ayala and Providence will launch a tender offer in the Philippines and the United States to acquire all of eTelecare's common shares as well as its American depositary shares at a price of $9.00 per share in cash. The offer price represents an approximate 76% premium over the companyÆs closing price on Nasdaq on September 18. The acquirers are advised by NM Rothschild with Weil Gotshal & Manges, SyCip Salazar Hernandez & Gatmaitan and Davis Polk & Wardwell providing legal advice.
The deal is contingent on the acquirers cornering at least 66.67% of eTelecareÆs shares and ADSs and is also subject to regulatory approvals. The transaction is not subject to any financing conditions.
eTelecare announced second quarter results in August, at which time it projected that its 2008 revenue would be between $300 million and $310 million and its net income between $9 million and $11 million. The latter was reduced from an earlier forecast of a net income of between $16 million and $19 million. eTelecare attributed the lower margins to costs related to new facilities in Texas and Nicaragua, lower Philippine revenues than previously planned and delays in some planned initiatives to improve efficiency.
The equity value of $290 million represents a multiple between 0.93 and 0.97 times forward revenue and a multiple of between 26 and 32 times this year's net income.
Ayala is one of the largest and most diversified business groups in the Philippines. It already owns a BPO firm, LiveIt Solutions, which has a 22% stake in eTelecare.
ôAyala Corporation has been a long-term and value-added shareholder, and a strong supporter of management's growth strategies,ö says John Harris, eTelecare's president and CEO in a written statement. ôWe look forward to their and ProvidenceÆs participation in the company's continuing success.ö
Providence manages funds with approximately $22 billion in equity commitments and focuses on investments in media, entertainment, communications and information companies. It has offices in New York, Los Angeles, London, Hong Kong and New Delhi.
Neither Ayala nor Providence clarified how the reconstituted board of directors of eTelecare would be formed or what role existing management would play after the deal is completed.
eTelecare services clients from delivery centres in the Philippines, North America, and Latin America and has more than 13,000 employees. In August, the company said it would spend $2.1 million to create a joint venture delivery centre in Nicaragua, which will employ around 500 people.
eTelecare moved towards the offer price last Friday, gaining 65% to close at $8.45. It is advised by Morgan Stanley with Pillsbury Winthrop Shaw Pittman and Romulo Mabanta Buenaventura Sayoc & De Los Angeles providing legal advice.
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