acquisition of ehro

8/8/2019 Acquisition of eHRO

1/18

Acquisition of eHRO

by

ACS (a Xerox Company)


2/18

Contents

Companies Introduction

Need of Acquisition

Target Search

Target Evaluation Negotiation Details

Type of Deal and Deal Structuring

Legal Aspects

Organization's Integration Planning Challenges Seen (Acquisition, Post Acquisition)

Benefits Hoped to be Reaped


3/18

News

May 25, 2010: Affiliated Computer Services

(ACS), a Xerox Company (NYSE: XRX),

announced a definitive agreement to acquireExcellerateHRO, LLP (EHRO) from Hewlett-

Packard Company. The transaction is expected

to close following the conclusion of the

customary closing conditions.


4/18

ACS, a Xerox Company

Provides InformationTechnology, Business ProcessOutsourcing (BPO) and Human Resources (HR/Benefits)services

ACS is based in Dallas, Texas

Current CEO is Lynn Blodgett

Operates in 100 countries, generating over $6 billion annually

As of September 2009, ACS employs approximately 74,000people

On September 28, 2009, Xerox Corporation announced plansto acquire ACS in a $6.4 billion transaction - The deal closedon February 8, 2010


5/18

ExcellerateHRO

ExcellerateHRO is the HR Services business of HP.

Offers a flexible portfolio of solutions to mid-size and

large organizations around the world. More than 20 years ofHR/benefits expertise and 45

years ofTechnology and business process

outsourcing (BPO) experience.

400 clients in the United States, Canada, EMEA(Europe, Middle East and Africa) and Latin America


6/18

Need of Acquisition

Value Addition (1+1 = 3 for clients)

Geographical expansion

Market Consolidation Mid and Small size client capturing

Technological expertise and expansion

Market Strategic Move (to show clients we arenot moving out of HR business after

Acquisition done by Xerox)


7/18

Target Search

ACS was actively looking for a partner

ACS had a definite budget allocated for an

Acquisition ACS was looking for a partner who was strong

in the verticals (Pension Administration)where ACS did not have an edge

HP had put eHRO up for sale

Must Have points were identified by ACS


8/18


9/18

Target Evaluation


10/18

Target Evaluation

Annual Revenue Generated

Liabilities on Target company

Annual Penalties Payout

Synergies That Could be Generated

Cost Reduction Measures leveraging ACSsBusiness

Integrating Operations Integrating Technology

HPs Evaluation of Towers Perrin


11/18

Due Diligence

A legal structure review, including tax liabilities, employeedisagreements, class action suits and other pending litigation.

A review of ownership and capitalization structure.

A general breakdown of the customer base, with a more

detailed analysis required to make an effective assessment. A review of intellectual property rights, including trademarks,

patents, and other areas of unique and intrinsic value.

Outstanding liens that are guaranteed by the company and/orits owners.

Technology evaluation that includes development tools,cycles, processes, and personnel.

Financial statement review for the prior three to five years,including the minutes of board meetings.


12/18

Type of Deal and Integration Planning

All Cash Deal Neither ACS is now listed nor

is eHRO

Structural Integration: eHRO merged in ACS(not Xerox directly)

Functional Integration: eHRO merged with

HCMS vertical of ACS


13/18

Legal Aspects

US company regulatory bodies showed some

objection to such a consolidation, due to

industry attaining monopolistic behavior

Minor delays in merging the European

branches directly to US ACS

No other Legal issues were reported apart from

these


14/18

Challenges Seen

Xerox Acquired ACS while ACS was in negotiations

with eHRO

Resolved by taking again a buy-in from executive

management of Xerox

Other big players in HR services were in bidding list

Resolved as eHRO also saw a natural synergy with ACS

HR and ITeS Cultural Mismatch Is currently being worked upon. Steps like carving out adifferent HR vertical (HRSS) in ACS are taken


15/18

ACS-eHRO: A Perfect Fit


16/18

Benefits Hoped to be Reaped

Growth: The two companies strong marketpresence, go-to-market flexibility, fit-for-purpose,size, scale and scope are the foundation for

unmatched global competitive advantage andenterprise growth.

Stability: The acquisition will deliver long-termstability for clients of both ACS and EHRO

Expertise:No other provider can match thecombined companies deep domain expertise, globalsize and scope; and long-term market commitment


17/18

Benefits Hoped to be Reaped (Cont..)

Innovation: The acquisition will accelerate anddeliver an unprecedented level of product and serviceinnovation for clients

Service:We have the flexibility to allow clients tochoose either a co-source or outsource servicedelivery model without disruption or change intechnology as well as to off-shore, on-shore or near-shore.

Execution: The scale of the combined companieswill generate better efficiency and execution; de-riskimplementations and produce an outstanding serviceexperience for our clients.


18/18

Thank You

acquisition of ehro

Documents