Marrying CEB's insights and data with SHL's assessments, predictive analytics and robust technology platform, it is hoped the acquisition will create a global organisation with a greatly enhanced capability to help clients manage talent, transform operations and reduce risk.
Headquartered in the UK, SHL has operations in Europe, Asia and the U.S. It serves more than 10,000 clients in 111 countries, including more than 40% of the Fortune 500 and over 80 percent of the FTSE 100. 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 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 career opportunities for a more than 3,000 employees as part of a global organisation committed to "advancing the science and practice of talent management".
Tom Monahan, chairman and CEO of CEB, said: "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."
David Leigh, CEO of SHL, added: "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."
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.
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.
