AMSTERDAM, July 20, 2011 /PRNewswire/ --
Key points
- Randstad to acquire SFN Group through a cash tender offer at
$14 per share
- Randstad will become the third-largest HR services provider in
North America
- A unique strategic fit: enhancement of service offerings and
geographic coverage
- The transaction will be immediately accretive to Randstad's
earnings per share
- Randstad has agreed on a new syndicated revolving credit
facility
Creating a leading HR services provider in North America
Randstad (RAND.AS), the second largest HR services provider in
the world, and SFN Group (NYSE: SFN), a leading workforce solutions
company in North America, today
announced that they signed a definitive agreement whereby Randstad
will acquire SFN Group through a cash tender offer. As a result of
the acquisition, Randstad will become the third-largest HR services
provider in North America,
doubling its presence in the US and reinforcing its leading
position in Canada. Randstad and
SFN Group have a comparable service offering in North America and a complementary geographic
coverage, which creates a unique strategic fit.
In North America, the
combination will have revenues of $4.6
billion (pro forma, LTM March 31,
2011) of which 39% in Professionals, 52% in Staffing and 9%
in HR Solutions (Payrolling, Managed Services and Recruitment
Process Outsourcing). This represents under 5% of the highly
fragmented North American HR Services market. The combination will
have over 5,000 employees and operate from over 1,000 outlets. As a
result of the transaction, the Randstad Group will have combined
revenues of approximately $22
billion/ euro 17 billion (pro
forma, LTM March 31, 2011).
Randstad plans to commence a cash tender offer for all shares at
$14 per share. The transaction is
subject to customary closing conditions including regulatory
approvals and the tender of at least 50% of SFN Group's outstanding
shares. The transaction has been unanimously approved by the boards
of both companies. Randstad expects to close the transaction in
September 2011. Randstad will finance
the transaction by borrowings under its existing credit
facilities.
Ben Noteboom, CEO of Randstad
says: "We are very excited about the opportunity to become a
leading company in North America.
SFN Group is a great company with professional and dedicated
people, a good match with Randstad. The future combination will
increase opportunities for growth and development of all employees.
And by sharing best practices and leveraging the cross selling
potential, we will be well-positioned to offer our clients and
candidates an unrivaled portfolio of services. We are proud to be
taking another step in shaping the world of work."
"The executive management and I are confident that the
combination of our two companies is a strong strategic fit that
will not only deliver expanded service offerings for our clients in
North America, but also creates
opportunities to service them on a global basis," says
Roy Krause, SFN Group President and
Chief Executive Officer. "Both companies have complementary
cultures and values which will provide growth opportunities for our
staff associates."
Compelling strategic rationale
The HR services industry is still relatively young, highly
fragmented and continues to develop quickly. Over the years,
Randstad and SFN Group each have expanded rapidly through a
combination of organic growth and a series of successful
acquisitions. Many global trends impact the industry, ranging from
demographic changes, skills shortages, the increasing need for
flexibility and the growing customer need for global one-stop
solutions. Randstad and SFN Group will have the scale and scope to
capitalize on these trends in the U.S. and Canada. The combination will benefit both
clients and candidates and offers more development opportunities
for all employees.
By combining with SFN Group, Randstad becomes a leading HR
services provider in the U.S. and Canada offering an unrivaled portfolio of
services and will be well-positioned to match candidates with
clients who are looking for a total offering.
The acquisition of SFN Group fits perfectly into Randstad's
stated strategy:
- Randstad becomes a leader in the Professionals staffing segment
in North America, with significant
expertise in IT and Finance & Accounting;
- Randstad will hold a number two position in the administrative
segment and a top five position in the light industrial staffing
segment;
- The density of Randstad's office network will be significantly
enhanced across the U.S.;
- With Inhouse Services, Randstad has a unique service offering
for large industrial and logistical clients;
- Randstad becomes the leader in Recruitment Process Outsourcing
in North America with an enhanced
platform for growth in Managed Services.
Significant opportunity for value creation
Randstad and SFN Group will capture the significant growth
opportunities available in the North American market through its
leading positions in key segments and improved geographic coverage.
In addition, the combination will benefit from significant
cross-selling opportunities, such as through the introduction of
inhouse services and sharing of best practices and processes.
Combined with further efficiency improvements and office
optimizations, it is expected that the combination will generate
$30 million of annual run rate
pre-tax cost synergies. Most of the synergies will be achieved
within the first year after completion of the transaction. By
combining the two businesses and based on Randstad's unique
financing and tax structure, Randstad will be able to generate
additional recurring tax savings of around $10 million. Integration costs to capture these
synergies are estimated to amount to around 80% of the annual cost
synergies. The integration process is expected to start as soon as
possible and will be built on the valuable experiences gained
during recent integrations and by involving people from both
companies.
The transaction is expected to be immediately accretive to
Randstad's earnings per share and ROIC is expected to surpass
Randstad's cost of capital (WACC) within 3 years based on a
moderate growth scenario.
Key terms of the offer
Under the terms of the definitive agreement, Randstad will
commence a cash tender offer to acquire all of SFN Group's (fully
diluted) outstanding shares of common stock at a price of
$14 per share, which equals a total
consideration of approximately $771
million representing:
- a 49% premium over the SFN Group volume weighted average share
price for the month ended July 19,
2011;
- a 40% premium over the SFN Group volume weighted average share
price for the 3 months ended July 19,
2011;
- a 22% premium over the SFN Group volume weighted average share
price for the 6 months ended July 19,
2011;
- an implied 11.2x EV/EBITDA multiple for the 12 months period
ending March 31, 2011.
Financing of the offer
Randstad will finance the transaction from borrowings under its
existing credit facilities. In line with Randstad's stated
financing policy the leverage ratio (net debt / EBITDA) is expected
to remain below 2.0 by the end of year.
Randstad has also agreed on the terms and conditions of a new
syndicated revolving credit facility with a group of 7 banks. The
facility has a forward start structure. As such, this facility will
only become available when the current facility, which runs until
May 2013, has been canceled in full.
Randstad has decided to refinance early to benefit from favorable
credit market circumstances and ensure financing until, at least,
2016. Randstad has agreed on comparable financial covenants as in
the existing facility. Later this summer there will be a general
syndication process. The new revolving credit facility with a
minimum size of euro 1,050 million
will have a maturity of 5 years from signing, with the potential to
extend to 7 years through the exercise of extension options on the
first and second anniversary of the facility at the discretion of
the banks.
Process and indicative timetable
Randstad and SFN Group aim to launch the tender offer as soon as
possible. Further information will be shared if and when
appropriate.
Advisors
Bank of America Merrill Lynch is acting as an exclusive
financial advisor to Randstad, and Dechert (USA) and Allen & Overy (Netherlands) are acting as legal advisors to
Randstad. Foros is acting as a financial advisor to SFN Group and
Jones Day is acting as a legal
advisor to SFN Group.
Analyst conference call
On July 21st, at 14:00CET/13:00GMT/08:00EST,
Randstad and SFN Group will host an analyst conference call, which
can be accessed through the following numbers: +1 718 354 1226
(USA); +44(0)208 817 9301
(United Kingdom) or +31 (0) 20
7965 213 (Netherlands). The access
code is: 5308602. You can listen to the conference call through
real time audio webcast. For the conference call and webcast,
pre-registration is not necessary. Shortly before the presentation
starts, a slide presentation will be available on our website:
http://www.ir.randstad.com/presentations.cfm. A replay of the
presentation and Q & A session will be available on our website
by the end of the day.
Second quarter and half year results 2011
Randstad achieved organic revenue growth per working day of 11%
in the second quarter of 2011. The North American region showed 14%
organic revenue growth per working day against a strong comparison
base. Randstad will publish its second quarter and half year
results on July 28, 2011. SFN Group
will publish its second quarter and half year results on
July 27, 2011.
Enquiries
Randstad
Jan-Pieter van Winsen (Investor
Relations) & Machteld Merens
(Media)
+31 20 569 56 23
US and Canada media
Ruth Pachman/Donald Cohen-Cutler
Kekst and Company +1 212 521 4800
Randstad Profile
Randstad specializes in solutions in the field of flexible work
and human resources services. Our services range from regular
temporary staffing and permanent placement to inhouse,
professionals, search & selection, and HR Solutions. The
Randstad Group is one of the leading HR services providers in the
world with top three positions in Argentina, Belgium & Luxembourg, Canada, Chile, France, Germany, Greece, India, Mexico, the
Netherlands, Poland,
Portugal, Spain, Switzerland and the UK, as well as major
positions in Australia and
the United States. End 2010
Randstad had approximately 27,500 employees working from close to
4,200 branches and inhouse locations in 43 countries around the
world. Randstad generated a revenue of euro
14.2 billion in 2010. Randstad was founded in 1960 and is
headquartered in Diemen, the
Netherlands. Randstad Holding nv is listed on the NYSE
Euronext Amsterdam, where options for stocks in Randstad are also
traded. For more information see www.randstad.com
SFN Group Profile
SFN Group (NYSE:SFN) is a strategic workforce
solutions company that provides professional services and general
staffing to help businesses more effectively source, deploy and
manage people and the work they do. As an industry pioneer, SFN
Group has sourced, screened and placed millions of individuals in
temporary, temp-to-hire and full-time jobs for more than 65
years. With approximately 560 locations in the United States and Canada, SFN delivers strategic workforce
solutions that improve business performance. From outsourcing to
technology to professional services to staffing, SFN delivers the
best combination of people, performance and service to improve the
way work gets done. It provides its services to over 8,000
customers, from Fortune 500 companies to a wide range of small and
mid-size organizations. The company employs more than 170,000
people annually through its network and is one of North America's largest employers. SFN
provides its solutions through a family of specialized businesses:
Technisource, Tatum, The Mergis Group, Todays Office Professionals,
SourceRight Solutions and Spherion Staffing Services. To learn
more, visit www.sfngroup.com.
Disclaimer, Securities Law Disclosure and Additional
Information
The tender offer for the outstanding shares of common stock of
SFN Group has not yet commenced. No statement in this press release
is an offer to purchase or a solicitation of an offer to sell
securities. At the time the tender offer is commenced, Randstad and
an indirect wholly-owned subsidiary of Randstad will file a tender
offer statement on Schedule TO with the Securities and Exchange
Commission, and SFN Group will file a solicitation/recommendation
statement on Schedule 14D-9 with respect to the tender offer. Any
offers to purchase or solicitations of offers to sell will be made
only pursuant to such tender offer statement. The tender offer
statement (including an offer to purchase, a related letter of
transmittal and other offer documents) and the related
solicitation/recommendation statement will contain important
information, including the various terms of, and conditions to, the
tender offer, that should be read carefully by SFN Group's
stockholders before they make any decision with respect to the
tender offer. Such materials, when prepared and ready for release,
will be made available to SFN Group's stockholders at no expense to
them. In addition, at such time such materials (and all other offer
documents filed with the SEC) will be available at no charge on the
SEC's website, www.sec.gov.
Certain statements in this document comprise forecasts on
Randstad Holding's future financial condition and results from
operations and certain plans and goals. By their nature, such
forecasts generate risk and uncertainty because they concern events
in the future and depend on circumstances which then apply. Any
number of factors can cause actual results and developments to
deviate from those expressed in the forecasts stated here. Such
factors can be, but are not limited to, general economic
conditions, scarcity on the employment market, the variation in the
demand for (flexible) personnel, changes in employment legislation,
future currency exchange rates and interest rates, future corporate
mergers, acquisitions and divestments and the speed of technical
change. The forecasts speak only as at the date of this document.
Quarterly figures and LTM figures are unaudited. This document does
not constitute or form part of an offer to sell securities or the
solicitation of an offer to buy securities.
SOURCE Randstad