French CMS vendor Groupe Acticall is to acquire Sitel Worldwide, buying the 86% stake owned by Onex for ~$55m including an earn-out component. Groupe Acticall has financing for the acquisition from Société Générale and BNP Paribas

It comes as no surprise that Onex is selling its stake in Sitel. What is perhaps a surprise is the size of the company making the acquisition - and the price.

Groupe Acticall, a national player in the French CMS market CY 2014 revenues of $196m, has grown through largely inorganic means since its inception in 1994. t is owned by Creadev (55%) and founders and exec officers Laurent Uberti, Olivier Camino and Arnaud De Lacoste (45%).

The much larger Sitel Worldwide has been majority owned by PE firm Onex Corp. since January 2007 when ClientLogic, which Onex owned, merged with the larger Sitel. Onex has to date invested $320m into Sitel. Onex’s general strategy would be to realize an investment of this nature by 15 years at the latest. In this case Onex has decided to sell its stake in a company that has been struggling with profitability for years.

In mid-2013 Sitel restructured to support a focus on higher margin activities such as its SaaS offerings, transformational CMS contracts (such as the win with TDC in September 2014), WAHA, multi-channel and social media support. By the end of 2014 these measures had not yet had a chance to have much effect, with Sitel’s operating margin reducing from 4.6% in 2013 to 3.4% in 2014. Q1 2015 performance was more favorable, with revenues up 1.2% y/y, up 10% in CC, to $355m, and operating margin up 1.6 pts to 4.4%. The company has been exiting low margin/unprofitable contracts and closing some contact centers, while opening others (e.g. in Nashville, TE, Pompano Beach, FL, Coventry, U.K. and Bulgaria).

At end Q1 2015, Sitel had ~ 59k employees, with approximately 41.4k in the Americas (which includes APAC) and 17.6k in EMEA. The company has 108 contact centers across 21 countries.

Following the acquisition the combined company will have ~68k employees and 128 contact centers globally.

This is a fire sale by Onex, the purchase price of $55m representing just 1.1 x 2014 EBIT and a fraction of its $1.44bn revenues.

Sitel was the fourth largest CMS vendor (in terms of CMS BPS revenue) in CY 2014. This is a reverse takeover with the well-established Sitel name being retained and its current management team remaining in place… though it is not yet clear where the combined entity’s head office will be. Like Teleperformance, the largest CMS vendors globally, Sitel will have French ownership.

We look forward to hearing more about the strategic intentions for the future Sitel & Groupe Acticall.