Paxys Inc. acquires Australian outsourcing firm for A$36.7M

Paxys Inc., the only call center listed on the Philippine Stock Exchange, has signed an agreement to acquire full ownership of Smart Salary Pty. Ltd., Australia’s second largest outsourced remunerating packaging administration company, for A$36.7 million in cash and new shares.

Under the agreement, Smart Salary has the option to receive a portion of the purchase price in new shares of stock of Paxys.

"Assuming that the sellers shall exercise their option to take new Paxys shares, such primary issuance will not constitute 10 percent or more of the resulting expanded outstanding capital stock," Paxys said.

Smart Salary’s services ensure the implementation of a well-aligned salary packaging policy and the delivery of a comprehensive tax management reporting suite. The company also provides associated services for its clients, such as financial planning, car lease finance broking and other related employee benefits.

Over the last two years, Smart Salary was ranked among the top 25 companies in the Business Review Weekly’s FAST 100 index of Australia’s fastest growing small to medium sized companies. It now employs almost 100 staff, across five Australian capital cities, providing high quality service to over 55,000 employees across 55 employer organizations.

In the nine months of its fiscal year ending June 2006, Smart Salary has generated total revenues of A$10.2 million.

In view of this announcement, the Philippine Stock Exchange suspended yesterday the trading of shares in Paxys pending submission of more details on the proposed transaction.

Paxys, one of the fastest-growing call center firms in the country, reported a 176-percent growth in its net profit last year on new clients and new markets. Its net income reached P339.23 million compared with only P122.9 million a year earlier.

Service income grew 115 percent to P1.4 billion from only P600 million, mainly coming from work programs from new US-based clients, which started on production in various months last year.

The increase in service income is also attributable to additional services and promotions of a local client that requires additional number of seats and to the increase in production of old clients. From only 800 seats beginning 2004, Paxys subsidiary Advanced Contact Solutions, (ACS) ended the year 2005 with 3,000 seats.

To ensure continued growth, Paxys is looking at Australia and Europe as new sites for expansion.

Paxys also plans to acquire a majority stake in Global Idealogy Corp. (GIC), a leading provider of corporate mobile software applications in the domestic pharmaceutical industry.

Paxys said the acquisition of GIC is intended to support its strategic intent to broaden and deepen its product and service offerings in the business processing outsourcing sector.

Together with its recent investment in ScopeWorks Asia, a data transcription company, the acquisition of GIC is envisioned to complement ACS, Paxys’s staple call center business.

Paxys’ goal is not only to expand its core voice services but also to diversify into advance data services and eventually advance into IT outsourcing and other information technology solutions.