TCS in race for UK-based BPO Vertex | india | Hindustan Times
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TCS in race for UK-based BPO Vertex

TCS is holding discussions with United Utilities to acquire its BPO arm 'Vertex' for an $800 mn.

india Updated: Jun 15, 2006 14:24 IST

India's largest software company Tata Consultancy Services is holding discussions with United Utilities to acquire its Business Process Outsourcing arm 'Vertex' for an estimated $800 million (Rs 3,600 crore).

"Talks are at preliminary stages," sources in the know said.

Meanwhile in response to a query, TCS told Bombay Stock Exchange that as a matter of policy it does not respond to any speculative news items or queries in such matters.

"As indicated in the past, acquisitions are a part of the company's growth strategy. Accordingly, the company considers from time to time various proposals for acquisitions and mergers," it said.

A company spokesperson, when contacted, refused to comment.

Sources, however, said that the acquisition of Vertex could cost around $800 million to TCS.

Vertex - which runs back office in areas like customer services, human resources, procurement, finance and accounting - is already a client of TCS.

It has 9,000 employees across UK, US, Canada and India. The company has two centres in Gurgaon and 1,800 employees.

Vertex's revenues have been flat for a while and this could be one of the reasons for the sale.

Its revenues this year were $688 million as against $673 million last year. It made an operating profit of $35 million this year.

United Utilities, the parent of Vertex, operates electricity distribution and water works in England.

For the sale of Vertex, the company has appointed Merrill Lynch as an advisor.

If TCS is successful in its bid for Vertex, it will be the largest acquisition by it anywhere. The largest acquisition by the company so far is Aviation Software Development Consultancy, which it bought for $140 million in March 2004.