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Corporate Executive Board (CEB) to Acquire UK-Based SHL for $660 Million…from SHL
Combination Creates World’s Foremost Source of Insight on Talent Measurement and Management
If you are looking for a new Talent Management System, or any HR system, don’t rely solely on “recommendations” or published reports. Do yourself a huge favor and talk to HRchitect first. After 15 years, HRchitect has unparalleled knowledge of the HR and Talent Management vendor community and can save you time and money in selection and implementation. Simply put, do not invest in any kind of HR technology without consulting with the experts first. HRchitect is always available to help!
The Corporate Executive Board Company (“CEB” or the “Company”) (NYSE: EXBD), the leading member-based advisory company, today announced that it has signed a definitive agreement to acquire SHL, a global leader in cloud-based talent measurement and management solutions, from funds managed by HgCapital and Veronis Suhler Stevenson (“VSS”) for $660 million in cash, subject to customary pre- and post-closing adjustments.
The combination brings together two highly complementary businesses to create the world’s foremost source of insight on the measurement and management of talent for business and government. Marrying CEB’s rich best practices, insights and data with SHL’s assessments, predictive analytics and robust technology platform will create a global organization with a greatly enhanced capability to help clients manage talent, transform operations and reduce risk.
SHL is the largest global provider of cloud-based solutions for talent assessment and decision support, enabling client access to unparalleled data, analytics and insights for assessing and managing employees and applicants. Headquartered in the U.K., SHL has operations in Europe, Asia, Africa, Australia, New Zealand and the U.S. They serve more than 10,000 clients in 111 countries, including more than 40 percent of the Fortune 500 and over 80 percent of the FTSE 100. Each year, SHL delivers more than 25 million assessments in over 30 languages. SHL was acquired by HgCapital in 2006 in a take-private transaction, and VSS became a co-investor in 2011 following SHL’s merger with the talent assessment firm PreVisor.
The acquisition will significantly expand the addressable market of both companies through an increased global presence across all major developed and emerging markets, enhancing CEB’s ability to scale and extend its existing platform with technology-driven solutions. The combined company will offer compelling career opportunities for a talented base of more than 3,000 employees as part of a larger, stronger global organization committed to advancing the science and practice of talent management.
Said Tom Monahan, Chairman and CEO of CEB, “For more than two decades, CEB has helped senior executives manage talent with the same rigor and analytic depth that they use to manage other vital corporate assets. We see a continual increase in the demand for talent measurement and analytics to drive organizational performance. The combination of these enterprises creates a uniquely valuable resource to help executives apply predictive analysis to the selection, development and management of talent. SHL’s established global customer base and rich talent analytics, its leadership position in corporate talent measurement and its proven business model – which delivers highly recurring revenues, attractive sustainable margins and strong cash flows – make it a compelling strategic and financial fit for CEB. This acquisition will accelerate all elements of our existing growth strategy, and generate significant value for our clients and shareholders.”
Said David Leigh, CEO of SHL, “After 35 years of market leadership in driving efficiency, productivity and competitive advantage for our clients, we are extraordinarily pleased to be joining with CEB. The two companies share a commitment to delivering actionable insights for clients. This is an exciting new chapter for SHL and its talented employees, who will have new opportunities as part of the combination, and whose expertise will be valued by the broader combined client base.”
Continued Mr. Monahan, “By capitalizing on the combined company’s deep functional knowledge, rich data sets and scalable delivery platform, this transaction will enhance our offerings across all functional areas, including HR, Finance, IT, Legal and Sales and Marketing. This acquisition is an important, exciting step in the execution of our ongoing growth strategy of deepening member relationships and delivering high-value support to more of their important work. ”
Concluded Mr. Monahan, “We expect the acquisition to be accretive to CEB’s 2013 EPS, without dependence on realizing significant cost synergies. We project sufficient cash flow to maintain our current dividend growth policy while also deleveraging in the near-term. We are confident that we have the infrastructure and resources in place to successfully and seamlessly integrate SHL into the growing CEB suite of offerings, and we look forward to welcoming all of SHL into the CEB family.”
In 2011, SHL’s total revenues were $209.8 million and Adjusted EBITDA was $56.9 million. CEB’s revenues were $484.7 million and Adjusted EBITDA was $112.6 million in 2011. CEB expects the transaction to be accretive to EPS in 2013 and to generate approximately $5 million of annualized pre-tax cost synergies beginning in 2013. The acquisition is expected to close in the third quarter of 2012, subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. CEB will fund the acquisition with borrowings under a new $625 million secured credit facility that CEB entered into at the time it signed the agreement to acquire SHL, together with approximately $85 million of cash on hand. The new credit facility will include $575 million of funded term loans and a new $50 million revolving credit facility, which will replace CEB’s existing $100 million credit facility upon closing of the SHL acquisition.
CEB also today reaffirmed its full-year 2012 outlook as it relates to the existing business (excluding any impact of the SHL acquisition). CEB plans to update its annual guidance with combined company expectations once the SHL acquisition is completed.
Allen & Company LLC and BofA Merrill Lynch are acting as CEB’s financial advisors, and Kirkland & Ellis LLP is acting as the Company’s legal advisor. BofA Merrill Lynch and Barclays are providing committed debt financing for the transaction.
SHL’s shareholders, including HgCapital and VSS, were advised on this transaction by Morgan Stanley, Weil, Gotshal & Manges and Deloitte.
For more information on SHL, please visit www.shl.com.
To learn more about HRchitect and how we can help your organization, please visit www.HRchitect.com. HRchitect is the leader in HR systems strategic consulting. As the premier Human Capital Management (HCM) and Talent Management Systems consulting firm, we offer end-to-end HR technology consulting services focused around strategic planning, evaluation/selection, project management and implementation of HR systems, Talent Management Systems, Talent Acquisition Systems, and Workforce Management software. After more than 15 years in business working on over 1800 successful engagements for more than 800 clients across the globe, HRchitect is a name you can trust as your one-stop shop for all your HR technology consulting needs.
Matt Lafata, HRchitect
Read more at The Puzzling World of HRtechnology
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