Rebuffed in an attempt to acquire business process outsourcing firm PeopleSupport Inc. for $15 a share last December, Philippine outsourcer IPVG Corp. and Asian private equity firm American Orient Capital Partners Ltd. have increased their offer to $17 a share, or $385 million.

In a letter sent to PeopleSupport chairman and CEO Lance Rosenzweig on Friday, IPVG said it was "unfortunate" that PeopleSupport did not engage in serious discussions with the company "despite repeated attempts to have confidential dialogues regarding our proposal." But it said in light of recent initiatives, revised earnings guidance and a new strategic plan that PeopleSupport announced in December, IPVG was prepared to make a revised offer.
PeopleSupport declined comment. In rejecting the initial $340 million proposal, the Los Angeles-based company said the offer price was "inadequate" and failed to take into account its strategic value and growth plan.
Susquehanna Financial Group LLLP analyst Samuel Saunders said PeopleSupport would have to take the latest offer more seriously.

"I think they're better positioned to evaluate the offer this time around," he said. "The last time the offer came out of left field.

"Since then they've hired Credit Suisse, they've had a month to look at the market trends, and [have] a much better idea of what the business looks like in '08," he added. "They're better prepared."

At the time PeopleSupport rejected the initial offer, Saunders said based on the company's earning guidance, PeopleSupport would be valued at around $18 a share, or $405 million. However, the share prices of other outsourcing firms have weakened recently because outsourcing call centers are sensitive to economic cycles. Based on comparable valuations, Saunders said he would now value PeopleSupport closer to $15, based on the midpoint of its 2008 guidance.

In December PeopleSupport said revenue for 2008 would be between $180 million and $190 million, slightly higher than previous Wall Street estimates of $170 million. The company's earnings per share guidance of between 65 and 81 cents was significantly better than the 57 cent consensus Street estimate.

PeopleSupport is still expected to put up a fight with the latest offer. The company was co-founded in 1998 by Rosenzweig, who remains its chairman and CEO and has a firm grip on the company.

New York hedge fund Galleon Group, PeopleSupport's largest shareholder with a 24% stake, has pressed the company to conduct an auction to solicit other acquisition offers. Galleon also has urged PeopleSupport to remove its poison pill so it can potentially participate in the takeover alongside IPVG. Officials at Galleon could not be reached for comment.

The latest offer represents a 27% increase to PeopleSupport's closing price of $13.42 on Thursday. The company's shares were up 9% at $14.60 midday Friday.

IPVG on Jan. 9 said it acquired Hollywood, Fla.-based IT solutions provider Prolexic Technologies Inc. for $10.5 million.