Convergys to Acquire Intervoice

The boards of directors at Convergys and Intervoice have approved a definitive merger agreement for Convergys to acquire the interactive voice response, contact center and mobile messaging company for $335 million in cash.

The acquisition will give Convergys, a leader in outsourced call center services, a complementary set of call center solutions and Web-based self-care solutions, boosting its ability to offer both automated and live agent services.

One-third of Intervoice’s revenue comes telecom service providers. It also has thousands of enterprise customers in financial services, health care and other sectors. Its global channel and technology partnerships and sales presence should improve Convergys’ cross-selling opportunities. Convergys expects these opportunities to help accelerate revenue growth in 2009 and beyond.

Intervoice revenues for fiscal year 2008 were $202.4 million, more than half of which were maintenance and hosted services revenues.

“This acquisition is part of our plan to be the market leader in relationship management solutions,” said Dave Dougherty, president and CEO of Convergys.

He said that clients are demanding integrated relationship management solutions that combine both automated and live agent services. “We believe acquiring Intervoice allows us to compete more effectively as a single-source provider and enables us to grow our revenues and our earnings.”

Dougherty also said outsourcing accounts only for $60 billion of the $240 billion customer care market and that Intervoice, as a solutions provider, will help Convergys go after the rest.

Robert Ritchey, CEO of Intervoice, who has announced he would retire at the end of August, said, “While Intervoice has performed well independently for 25 years, this transaction should create significant value for our shareholders, new opportunities for our employees, and enhanced ways to drive our customers’ success.”

Ritchey also said he is confident about the competitive strength of the combined companies to compete against vendors with both billing and messaging products.

Dougherty said the rest of the Intervoice management team will remain with the company. Intervoice currently has approximately 700 employees.

Convergys will commence a tender offer for all outstanding shares of Intervoice common stock for $8.25 per share no later than Aug. 1, 2008. Following completion of the tender offer, the parties will effect a second-step merger in which remaining Intervoice shareholders will receive the same price per share.

Following the close of the transaction, Intervoice results will be included in the results of Convergys’ Customer Management Segment.

Dougherty said Convergys will continue to invest in the relationship management space. “At the same time, we think there is opportunity to consolidate, particularly in the customer care market.”