Goldman Sachs Reports Convergys Deal With AT&T

According to Goldman Sachs, Convergys CVG announced that it will sell its holdings in Cincinnati SMSA and Cincinnati SMSA Tower Holdings (“cellular partnerships”) to AT&T for approximately $320 mn in cash ($250 mn net of tax). Goldman Sachs said that the company noted that the sale does not require regulatory approvals, as AT&T already has majority control of the cellular partnerships. CVG expects the transaction to close in early July, 2011. “We view the announcement as a neutral event, as it does not affect the operating performance of CVG's core businesses or its revenue and operating profit outlook. From a fundamental perspective, we remain guarded on CVG shares on limited growth prospects and low relative sector rank. Although we acknowledge management's ongoing efforts in driving efficiencies, CVG's revenue performance remains sluggish, and we see persisting revenue headwinds from the deflationary impact of offshore and increased competition. Our EPS estimates and price target are unchanged.” Convergys closed yesterday at $12.55.