West Corp. (NASDAQ: WSTC) announced late Wednesday that it has entered into a definitive agreement with Alorica, Inc., an Irvine, Calif.-based provider of CRM solutions, for the sale of several of West’s agent services businesses for approximately $275 million in cash.
Businesses to be divested include West’s consumer-facing customer sales and lifecycle management, account services, and receivables management businesses.
Underscoring how large the deal will be for West and Alorica, West noted that total revenues will be impacted by some $580 million and that EBITDA would decline by nearly $50 million. Approximately 25,300 West employees will move to Alorica and and West’s total employee count will go from approximately 35,000 to 9,700 after the deal is closed.
“The divestiture is consistent with the Company’s stated objective of focusing on higher growth, more profitable assets,” said Tom Barker, chairman and chief executive officer. “We expect this transformative action will result in a faster growing organization with enhanced revenue visibility and reduced customer concentration. We will also become a significantly less labor-intensive company.”
Alorica, for its part, is touting entry into several new markets and service offerings, including receivables management. Alorica previously did not offer debt collection services. West, through its West Asset Management division, is a leading provider of accounts receivables and debt collection services. The unit has 15 domestic and offshore locations. West is also a prime collection contractor with the Department of Education.
Alorica is also very excited to leverage West at Home, West’s program for allowing certain agents to make calls from remote locations.
“As a developer of one of the first work-at-home solutions, West utilizes state-of-the-art technology and a proprietary work force management system, Spectrum™, which will become a core component of Alorica’s work-at-home service offering,” the company said in a press release.
The transaction is expected to close in the first quarter of 2015, subject to regulatory approvals and other customary closing conditions.
Separately, West will lease to Alorica owned real estate used by the businesses being sold. West plans to pursue a sale of this real estate in the commercial markets and complete such sale as soon as practical following the sale of the businesses to Alorica.