A Colorado call center company’s $227 million stock sale and merger deal will expand its presence across Asia and turn it into a 50,000-employee outsourcing giant just as Amazon.com is poised to push $600 million in business the company’s way.
But whether StarTek stays a Colorado-headquartered business after the transaction remains to be seen.
Greenwood Village-based StarTek Inc. (NYSE: SRT) announced a deal March 15 with Singapore-based Capital Square Partners to merge StarTek’s business with the Aegis call center business the CSP owns.
When the deal closes, scheduled for the third quarter of 2018, StarTek shareholders will own 45 percent of the merged StarTek-Aegis business while CSP will own 55 percent. It’s paying $227 million for StarTek stock as part of the transaction.
In a memo to employees, StarTek CEO Chad Carlson said leadership of the combined companies is still being sorted out but should be announced soon.
“At this time, the intent is to retain StarTek’s headquarters in Greenwood Village,” he wrote.
The company plans to remain listed on the New York Stock Exchange with its SRT ticker symbol.
Carlson predicted the deal is unlikely to have negative impacts on employees, and should increase the opportunities for professional advancement.
For the past two years, it has worked with Seattle-based online retail giant Amazon.com. Earlier this year, it reached a deal with an Amazon subsidiary that granted Amazon the right to purchase 4 million shares in StarTek in installments triggered in stages as Amazon spent $600 million with StarTek for services over eight years.
With that looming in StarTek’s future, it struck the deal to combine with Aegis, which runs 44 call centers in eight countries, including India, Malaysia, Saudi Arabia and across South America.
The geographies, languages and even most kinds of clients Aegis works with are different from StarTek’s core business, StarTek said.
“The complementary nature of this arrangement is truly unprecedented,” he said. “We have limited overlapping engagement centers and clients. Additionally, our employees are one of StarTek’s greatest assets and one of the many reasons why Aegis was interested in the merger.”
The combined businesses generated about $700 million in 2017 revenue.
StarTek operates call centers in the Philippines, which it considers offshore, and in the U.S., Honduras, Jamaica, which is considers its nearshore business, which generates about 75 percent of its revenue. The company employs about 13,500 people worldwide.
The company has historically drawn more than two-thirds of its business from telecom and cable TV companies but has been broadening into other industries such as health care and retail.
In 2017, 58 percent of StarTek revenue was coming from its domestic call centers, with another 15 percent from its Jamaica and Costa Rica.
But the U.S business has had just 4.3 percent gross profit margin and other struggles — including a slowdown in work surrounding the release of Apple’s iPhoneX compared to volumes StarTek did supporting the previous Apple phone release, the iPhone 7, StarTek said.
The offshore and near-shore business both posted double-digit profit margins last year.
2018 Largest Denver-Area Social and Digital Media Marketing Firms
Ranked by Number of Denver-area social and digital media marketing client accounts
Rank Company name Number of Denver-area social and digital media marketing client accounts 1 Elevated Third 180 2 Harmony Design LLC 122 3 Neon Rain Interactive 107 View This List