The Basch Report: Convergys merger may not impact city
Synnex Corp.’s pending $2.8 billion buyout will merge company with its subsidiary Concentrix.
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Convergys Corp.’s Jacksonville operation has seen wide swings in employment over the past 35 years, since it opened as a subsidiary of AT&T Corp.
But based on what the companies are saying, it seems unlikely that Synnex Corp.’s pending $2.8 billion buyout of Convergys will have much of an impact on its Jacksonville workforce.
Synnex will merge Convergys with its subsidiary called Concentrix, according to the agreement announced June 28.
Although both provide outsourced customer service functions for businesses, there is little overlap in clients and functions, the companies said.
“Concentrix has indicated that there is no plan to close any locations at this point,” Convergys said in a memo for employees posted in a Securities and Exchange Commission filing.
“If there are cities or locations in which we both have a presence, and there is capacity, it may make sense to consider consolidation,” it said.
The merged company will have about 275 offices in 40 countries. According to the Concentrix website, its closest office to Jacksonville is in Greenville, South Carolina.
Cincinnati-based Convergys operates about 150 sites but its Jacksonville office is one of only four buildings it actually owns, according to its annual report.
The 330,000-square-foot building at 8000 Baymeadows Way was opened in 1983 by AT&T American Transtech, a subsidiary of AT&T formed to handle shareholder services after the court-ordered breakup of the telephone company.
AT&T sold the business, which had become a provider of business services for other companies, to Cincinnati Bell Inc. in 1998. Cincinnati Bell spun off its customer service business later that year into the company called Convergys, which inherited the Jacksonville building.
The Jacksonville operation employed more than 4,000 people at its peak under AT&T, but Convergys said it currently employs about 1,000 people.
Employment has fluctuated under Convergys as contracts were won and lost.
Synnex said it expects to realize $150 million in cost saving from the merger over three years, but its explanation of the cost cuts — as often happens when mergers are announced — was vague.
“Cost savings will primarily come from delivery center alignment, rationalization of third-party spending and the leverage associated with our global infrastructure,” Concentrix President Christopher Caldwell told analysts in a conference call, according to a transcript posted by Synnex.
Boeing, Embraer announce strategic partnership
After trying to work out a deal for months, Boeing Co. and Brazil-based Embraer S.A. announced a “strategic partnership” last week.
Boeing will own 80 percent of the joint venture that will focus on Embraer’s commercial aircraft business.
The two companies also said they plan to create a joint venture to focus on military aircraft, but they did not give details.
Both companies have Jacksonville operations. Embraer builds military aircraft at its facility at Jacksonville International Airport and Boeing has a repair and modification facility at Cecil Commerce Center.
Neither company responded to email inquiries about their Jacksonville operations. The most recent data from JAXUSA Partnership showed Boeing with 370 employees in Jacksonville and Embraer with 100.
The companies said the partnership could take 12 to 18 months to complete, and it will be a major issue in Brazil.
The Brazilian government has veto power over any deal involving Embraer, and the potential loss of control to an American company will be controversial.
The companies said the joint venture will be led by a Brazil-based president and CEO, but “Boeing will have operational and management control of the new company.”
mCig sees profit from hemp
The U.S. Senate two weeks ago acted to make hemp production legal at U.S. farms, and one Jacksonville-based company is hoping to profit from it.
Publicly traded mCig Inc., which describes itself as a diversified company serving legal cannabis markets, has a joint venture to produce hemp at a farm in upstate New York.
“We see changes on the horizon for our industry,” mCig CEO Paul Rosenberg said in a news release Monday.
“Hemp legalization is drawing support from both sides of the political aisle as legislators learn more about how hemp can provide much needed revenue streams to farmers across the country,” he said.
The release followed a Senate vote to approve an agriculture bill which includes a provision to allow U.S. farms to grow hemp.
Senate Majority Leader Mitch McConnell has been supporting the hemp provision because he believes it will be an economic boon to farmers in his home state of Kentucky.
“Consumers across America buy hundreds of millions in retail products every year that contain hemp,” McConnell said in a news release.
“But due to outdated federal regulations that do not sufficiently distinguish this industrial crop from its illicit cousin, American farmers have been mostly unable to meet that demand themselves. It’s left consumers with little choice but to buy imported hemp products from foreign-produced hemp,” he said.
Hemp is derived from the cannabis plant which produces marijuana and because of this, hemp has been on a federal list of controlled substances.
However, according to the website of the National Hemp Association, “industrial hemp is the non-psychoactive, low-THC, oilseed and fiber varieties of the cannabis sativa plant. Hemp has absolutely no use as a recreational drug.”
Rosenberg said mCig will introduce a line of hemp products “that will include natural skin cosmetics, full spectrum tinctures and probiotic pets edibles.”
Besides hemp, mCig operates a variety of businesses that produced a total of $6 million in revenue in the nine months that ended Jan. 31.
More than half of that revenue came from its construction division that provides consulting for businesses looking to build cannabis grow facilities.
It also generated more than $1 million in revenue each from a social media division and a supply business.
The company’s stock trades on the OTC market under the ticker “MCIG.”
Speedway Corp. president seeks ‘star power’
International Speedway Corp. President John Saunders stirred up some controversy last week as the company announced quarterly earnings, two days before the Coke Zero 400 NASCAR race at the Daytona International Speedway.
Daytona Beach-based International Speedway owns that track and 12 other motorsports facilities that feature NASCAR racing.
Saunders said attendance was down about 10 percent at the six NASCAR races at his company’s facilities in the second quarter that ended May 31.
He blamed some of the attendance issues on a lack of “star drivers,” according to a transcript of the company’s conference call with analysts.
He didn’t name any drivers, but big names Dale Earnhardt Jr. and Danica Patrick are among the stars who recently retired.
“We still have an issue with star power and hopefully, this stable of young drivers coming along will start to win and build their brands,” Saunders said.
That comment raised the ire of some of the young drivers, who feel they shouldn’t be blamed for NASCAR’s attendance issues.
Although race attendance was down, International Speedway did report stronger results for the second quarter. Revenue rose 3.9 percent to $171.7 million and adjusted earnings rose by 7 cents to 37 cents a share.
Saunders said the company is taking steps to offset the decline in race admissions by using its facilities for other events, including a Country 500 music festival at the Daytona Beach facility on Memorial Day weekend.
International Speedway also hopes its massive One Daytona development surrounding the Daytona Beach track will contribute year-round revenue.
“We expect One Daytona to be the epicenter for retail, dining and entertainment in the greater Daytona Beach area,” Saunders said.