Xchanging acquires 75% stake in Cambridge Solutions

Source: Xchanging


  • 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."

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