NCO Group Owner Acquires Large BPO Firm for $470 million

One Equity Partners, majority owner of NCO Group, announced Thursday morning the acquisition of APAC Customer Services, Inc. (Nasdaq: APAC) in a deal valued at $470 million. APAC will be combined with NCO Group, according to One Equity.

One Equity, the private investment arm of JP Morgan Chase, will be paying a 57 percent premium to APAC’s Wednesday closing price per share. The deal calls for One Equity to pay $8.55 per share in cash.

APAC, based in Bannockburn, Ill., specializes in outsourced customer care solutions for a diverse client base. Founded in 1973, the company counts nearly 11,000 representative seats at 15 locations around the world. Nearly 60 percent of the company’s workforce is based in the U.S. In the first quarter of 2011, APAC reported net income of $7 million on $88 million in revenues, both increases from the previous year.

In the press release announcing the deal, One Equity specifically mentioned that it intends to combine APAC with NCO Group’s platform. NCO Group is one of the largest providers of debt collection services in the world and a major player in the BPO space through its CRM business line.

“We believe this combination will allow both APAC and NCO to enhance the levels of service and support that they currently provide to their valued customers,” said Tom Kichler, Managing Director at One Equity Partners. “We are excited about investing behind the growth of these two great businesses.”

NCO has been focusing more on its customer service business line as it exits the debt buying business. The company in May expanded its call center-based BPO capabilities with the acquisition of Protocol Global Solutions, Inc., a provider of contact center services that employs 2,200 in seven locations. NCO currently claims a total of more than 24,000 “representative seats” at over 100 locations in 11 different countries.

In the first quarter of 2011, NCO’s customer relationship management unit accounted for 18.2 percent of the company’s total revenue, up slightly from the same period a year prior.

Kevin Keleghan, APAC’s President and CEO, commented, “We are thrilled to be entering into a new chapter in APAC’s history. My management team and I look forward to working with One Equity Partners to build a world-class enterprise dedicated to enhancing the customer experience. We believe that a partnership with NCO will create new opportunities for our company, our clients, and our people.”

This deal is not the first deal involving Keleghan and One Equity Partners. Keleghan was the CEO of Outsourcing Solutions, Inc. (OSI) when NCO acquired it in early 2008 in a deal partially financed by One Equity. At the time, OSI was the second largest accounts receivable management services provider in the U.S. behind NCO.

The APAC-One Equity deal will be subject to shareholder approval and customary regulatory clearance and is expected to close in the fourth quarter.