News
Xchanging completes buy out of BAE Systems partnership businesses for £57m
09 Mar 2007
Xchanging is delighted to announce it has completed the buy out of two highly successful partnerships with BAE Systems in HR and procurement business processing for £57 million.
In 2001, Xchanging, the business processing services company, responded to BAE Systems’ imperative to find significant cost savings following a merger between British Aerospace and Marconi. Xchanging was chosen ahead of the competition because of its distinctive outsourcing model, the Enterprise Partnership, which promised to deliver value to BAE Systems by transforming the back office HR and procurement functions into profitable businesses.
Xchanging identified that BAE Systems could achieve three types of financial benefit, all of which have now been delivered. First, the creation of savings in respect of operational activities; second, generating dividends through a sharing of profits in the Enterprise Partnerships; and third, a delivery of capital upside through the sale of BAE Systems’ shares in the two businesses to Xchanging.
Over the lifetime of these partnerships, the success of the model has been demonstrated by contract wins in procurement and HR with a number of third parties.
The acquisition is the latest step in the continuing relationship between the companies. BAE Systems has recently signed a six year contract to continue with the services they receive from the two Xchanging businesses – a sign of the success of the partnerships in delivering day to day services to the customer.
Mike Turner, Chief Executive of BAE Systems, said, “This deal validates our strategy to look for innovation and value in the way we operate and in the partnerships that we form. We constantly look for ways to improve our business operations in all aspects, both in the front line and in administrative support functions. We are delighted that the partnerships with Xchanging have been so successful.”
David Andrews, CEO Xchanging commented, “I believe that we have the only business model which delivers multiple streams of value and also underpins service quality, as has been achieved with BAE Systems. Xchanging’s approach goes well beyond outsourcing. Today has proved how effective our partnering model is at creating value out of the back office and thereby “Xchanging cost for profit””.
Alastair Imrie, Group HR Director for BAE Systems, responsible for the Xchanging partnerships said: “We could not have got here by ourselves. The two partnerships have delivered what they set out to achieve both in terms of operational functionality and also in terms of value creation. We are delighted with the transformation of what were previously internal cost centres for BAE Systems into revenue generating and profitable businesses.”
Notes to Editors
Contact
David Trenchard
Stephen Malthouse
Tulchan Communications Group Ltd
Tel: +44 (0) 20 7353 4200
Email: xchanging@tulchangroup.com