(News Bulletin 247) – The specialist in outsourced customer relations has announced the planned acquisition of the Luxembourg company Majorel for an amount of 3 billion euros, with a capital component. At the same time, its first quarter sales were below expectations.

Between a less dynamic start to the year than anticipated by analysts and a very large acquisition project, Teleperformance takes the market on the wrong foot on Wednesday. The specialist in outsourced customer relations announced on Wednesday morning a transforming external growth operation, Teleperformance having decided to acquire the Luxembourg company Majorel for a total amount of 3 billion euros.

Founded in 1992 and listed in Amsterdam, Majorel is a company very similar to Teleperformance. It generated revenues of 2.1 billion euros last year, up 19% like-for-like.

A group with nearly 11 billion euros in turnover

The merger between Teleperformance and Majorel would give rise to a group with revenues of approximately 12 billion dollars (a little less than 11 billion euros) based on forecasts for 2023. Majorel should make it possible to complement Teleperformance’s skills in several countries, particularly in Europe, and to accelerate its growth in Asia-Pacific and Africa.

In addition, Teleperformance estimates that the transaction will generate synergies of between 100 million and 150 million euros per year, via “operational efficiency measures”, scale effects or the development of new products.

Regarding the takeover offer itself, Teleperformance will launch a takeover bid to acquire the entire capital of Majorel on the basis of 30 euros per share, which represents a premium of 43% compared to Tuesday’s closing price of Majorel. .

The shareholders of the Luxembourg company will have the choice of opting for payment in cash or in Teleperformance shares, within the limit of one billion euros of shares in the French group. The company intends to issue up to 4.61 million shares to serve this capital component. For the cash part, it will have recourse to a bank loan.

Dilution for shareholders

Majorel’s controlling shareholders – including the German Bertelsmann which owns RTL and M6 – have undertaken to tender their shares to the offer. These shareholders represent 79% of the capital.

The operation turns out to be surprising, given its importance. External growth has always been a key development focus for Teleperformance, but the group is not used to targeting companies of such an imposing size.

“It’s a surprising acquisition, in that Majorel is basically doing the same thing as Teleperformance without a big differentiator. It was difficult to foresee that the group would launch such a large acquisition, let alone on its ‘core business’ [son activité cœur de métier, NDLR]“, judges a financial analyst.

The capital part of the acquisition, synonymous with dilution for shareholders, can also seize up the market. Around 10 a.m., the Teleperformance share fell by 14%, the largest drop in the CAC 40.

A lower growth target

The title may also be penalized by the company’s disappointing start to the year in terms of activity. Over the first three months of the year, Teleperformance saw its revenues increase by 1.9% like-for-like, to 2 billion euros. However, according to a consensus quoted by Royal Bank of Canada, analysts were counting on an increase of 2.6%, on these same bases. Growth in the quarter was notably affected by “market turbulence following the collapse of Silicon Valley Bank, which delayed decisions by key potential customers”, notes Deutsche Bank.

In the light of this less dynamic start to the year than expected, Teleperformance was forced to revise downwards its growth objectives for the current year.

Excluding Covid-related contracts (which create a high basis of comparison for 2022), Teleperformance now expects growth of between 8% and 10% for the 2023 financial year, against “around 10%” previously. Meager compensation, the company has raised its operating margin target to around 16% against 15.7% previously.

“The adjustments to the outlook so early in the year and the comments on macroeconomic uncertainties in the year should raise questions,” said Stifel Bank.