Press reports suggested that United has already received several bids for Vertex, and that Merrill Lynch was being brought in to deal with the approaches. However, a spokesperson for United told Computer Business Review, Merrill Lynch approached us, and we asked them to look at Vertex’ market, and identify opportunities to grow shareholder value.
The spokesperson insisted that no strategic decision on Vertex had yet been taken. United’s CEO, Philip Green, has only been in the job since April, which the spokesperson suggested was not long enough to form a strong opinion about the future of any business unit.
These denials have done little to dampen rumors, however, with industry analysts suggesting that Tata Consultancy Services, India’s largest IT services vendor, could be among the companies interested in acquiring Vertex.
Manchester, UK-based Vertex provides business process outsourcing (BPO) services including contact center management, finance and accounting outsourcing, and human resources outsourcing. The company has approximately 9,000 employees located in centers in the UK, Ireland, Switzerland, Liechtenstein, the US, Canada, and India, and reported operating profit of GBP20.8 million ($38.3 million) on sales of GBP404.7 million ($745.3 million) in the year to March 2006.
Vertex traditionally derives the majority of its revenue from the energy and utilities sector, but has more recently begun to expand its presence in the UK local government sector. In 2004, it secured a 15-year deal worth GBP427 million ($786.4 million) with Thurrock Council, and the company has also won significant deals with Hertfordshire County Council and Westminster City Council.
Vertex has also been looking to establish itself in the financial services market. In March 2005 the company paid GBP95.3 million ($175.5 million) for Marlborough Stirling, which was renamed Vertex Financial Services. In February 2006, Vertex further expanded this operation with the takeover of 1st Software Group, which develops back-office software for independent financial advisers.
Should United decide to sell Vertex, it would be the latest in a string of deals in which large European companies have disposed of their captive IT operations. Most recently, Wipro acquired Enabler, formerly the in-house IT department of Portuguese retail company Modelo Continente, while other notable examples of this trend include the takeover by T-Systems of Gedas, the IT subsidiary of automobile manufacturer Volkswagen, and the purchase of Edinfor Sistemas Informaticos, the IT services division of Portuguese utility EDP, by LogicaCMG.
