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Serco pays £55m cash for Vertex UK public sector operation

Christopher Hyman

London: Serco Group plc, the international outsourcing and services group, has acquired Vertex Public Sector Limited, the UK public sector operations of Vertex Data Science Limited, for £55.5m cash.

The Vertex operation will be managed as part of Serco's recently created Global Services division.

Vertex Public Sector provides Business Process Outsourcing (BPO) services to UK local and central government. Major customers in local government include Westminster and Thurrock councils, and in central government include the Child Maintenance and Enforcement Commission (CMEC) and Job Centre Plus. Its 3,000 employees handle approximately 4.5 million citizen interactions a year.

The business provides multi-channel contact centres, shared transactional services and ICT services. In particular, it brings deep skills and capabilities in areas such as HR and payroll, revenues and benefits, complex case management and administration services.

Serco argues that the acquisition considerably increases its market presence and improves its position for large scale outsourcing opportunities. It expects to sell additional services into existing local government customers and thinks the Vertex operations also bring significant experience and scale to leverage in future opportunities within the central government market, as well as the potential transfer of capabilities to private sector customers.

The pro forma financial result for the year to 31 March 2012 for Vertex Public Sector Limited was approximately £110m of revenue and £8m of adjusted operating profit.

Christopher Hyman, Chief Executive of Serco Group plc, said, "This acquisition enhances the range of services we offer to the UK public sector as they seek to reduce costs whilst continuously improving outcomes for citizens.

"We are pleased with the important customer relationships it brings and the opportunity to extend and expand these. The newly added skills and capabilities will also help Serco address future prospects in both the local authority and central government markets.

"Following recent significant contract wins, this is another important step for our BPO strategy and the development of our Global Services business. This business will have annual revenues of over $1bn and approximately 50,000 employees offering a diverse range of middle and back office services to both public and private sector customers."

Vertex sold its UK private sector business to Capita last year for £41 million.

The UK-based group is now almost entirely an international business, serving primarily the US and Indian markets.

Serco will add Vertex to its Global Services business, which it created to accommodate other recent acquisitions including UK call centre outsourcing company The Listening Company, Indian BPO provider Intelenet and Excelior in Australia.

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