Pramerica Letterkenny to be taken over by TCS

Pique

https://www.rte.ie/news/business/2020/1112/1177685-pramerica-deal-with-tcs/

donegal_man

Hopefully this will save most of the jobs in Letterkenny however it's a sad reality that such take overs usually result in at least some people being made redundant as the new owners integrate their businesses.

byte

Yeah, this is the worry. Hopefully very few, if any, lose their jobs in this takeover.

James2020App

Looking into the details behind the deal is an interesting one.


Tata (The Indian buyer) also bought Post Bank from Deutsche Bank earlier last week and paid nothing for it. It was a similar story they took on 1,500 staff and got it for free, presumably because of redundancy costs etc.


They also appear to have bought Pramerica under a similar deal, the Irish Times reported that no money changed hands. The cost involved for Tata would be the possible redundancy costs and or ongoing wage costs of employees.



The redundancy costs could be substantial here, for example assume one employee has had an average salary of €30k and been employed in Pramerica for 10 years, they would be entitled to a redundancy payout of almost €13,500. There are 1,500 staff so in total a rough estimate of the possible redundancy costs would be 1,500*13,500 is €20.25 million and that is where the cost is to the buyer.


It seems to be a relatively low valuation for a company that made a profit of €12M and €13M in 2017 and 2018. (https://www.top1000.ie/pramerica) and Tata appear to be into buying companies on the cheap, if their two deals last week are anything to go by.


Prudential have stated that Tata "will continue to service and support Prudential under a multi-year services agreement", however I suppose the fear here is that a portion/or a lot of this work may be outsourced back to India as opposed to paying high Irish wages to meet the services agreement. It would also be interesting to see how many years left in the services agreement that there is.


It is not all doom and gloom either, I suppose it gives Pramerica the option of offering their services to other financial service providers and they will no longer be exclusively supporting Prudential. This also has advantages and disadvantages.


It will be fascinating to see how it plans out, however it will probably be more volatile than it has in the past.

retalivity

I was under the impression that pramerica had been supporting other companies/had other customers, other then prudential, for a number of years. I worked for them years ago and it was solely a subsidary, thought it changed after that.