Matrixx Marketing, one of Utah's largest private employers, will be part of a new company by the end of the year.
Cincinnati Bell Inc. announced Monday that it will spin off Matrixx and Cincinnati Bell Information Systems into a new company called Convergys Corp.The parent company will take Convergys public this year and later spin it off in a tax-free distribution to its shareholders.
Matrixx is the largest U.S. provider of outsourced customer management services. It employs 26,700 people at 33 call centers in North America and Europe, including more than 5,000 at nine centers in Utah.
Wayne Buckhout, Cincinnati Bell corporate communications manager, said the company had toyed with the idea of spinning off the subsidiaries for about 10 years.
"The real driver is that the customer care businesses, including Matrixx, are grown and mature," Buckhout said Monday. "All in all, we think it's really the right time, and these businesses need to have an opportunity to have management that's focused on them going forward."
Buckhout said Matrixx is the company's largest subsidiary, and that he does not expect the changes to lead to any job cuts.
"We feel that this is going to be an opportunity both for communications here in Cincinnati and . . . customer care businesses that include Matrixx to grow even faster in the future," he said.
"Nothing at all about this will affect employment in any significant way."
The time frame for the spinoff is "fluid," Buckhout said. A company press release said it will file a registration statement with the Securities and Exchange Commission next month regarding an initial public offering of Convergys shares.
Cincinnati Bell expects the offering to be finished during the summer, with distribution several months later.
The company also announced Monday that its president and chief executive, John LaMacchia, will retire after the spinoff is complete.
LaMacchia, 56, will remain for the transition, but not for longer than a year, a company statement said.
It is expected that Cincinnati Bell Chairman Charles S. Mechem Jr. will be elected chairman of Convergys, and James F. Orr, chief operating officer of Cincinnati Bell, will be president and chief executive of the new company.
Also Monday, Cincinnati Bell reported net income of $49.2 million, or 36 cents per share - excluding an acquisition-related charge - for the first quarter of 1998. The company said first-quarter revenues increased 18 percent to $508 million.
Matrixx Marketing's revenues for the first three months of the year increased 45 percent to $166.9 million, while its operating income fell 2 percent to $14.3 million.