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UPDATE 3-Corporate Executive Board to buy talent management firm
July 2, 2012 / 9:06 PM / 5 years ago

UPDATE 3-Corporate Executive Board to buy talent management firm

* Deal for $660 mln in cash

* CEB says deal to add to 2013 earnings

* CEB reaffirms 2012 outlook

July 2 (Reuters) - Research and advisory company Corporate Executive Board Co (CEB) plans to buy UK-based SHL from private equity firm HgCapital Trust Plc for $660 million in its largest acquisition yet to boost its talent management business.

SHL helps companies with recruitment, employee development and succession planning. It counts Barclays Plc, Coca Cola Co and Dell Inc as its clients.

The British company is half the size of CEB in terms of revenue but the number of corporate customers it has - more than 10,000 - is almost double that of CEB.

“This acquisition will enable us to maintain our high single-digit, low double-digit organic growth targets (on) a significantly higher revenue base,” CEB Chief Executive Tom Monahan said on a conference call.

Talent assessments is a $4 billion global market growing annually at 7 to 10 percent, according to CEB.

The combined company would have had revenue of $713 million as of March 31, CEB said. SHL had revenue of $209.8 million for 2011.

HgCapital bought SHL in 2006 for 100 million pounds ($156.89 million). U.S. private equity firm Veronis Suhler Stevenson became a minority investor in 2011.

Morningstar analyst Swami Shanmugasundaram said he would view the acquisition as neutral to the company: “I‘m not super excited but I do not think it’s value destructive.”

The deal does not have a lot of cost synergies but provides CEB with a wider client and global base, he said.

CEB said it expects the deal to add to its 2013 earnings. It also reaffirmed its full-year outlook, excluding impact from the acquisition.

The company will fund the acquisition with borrowings under a new $625 million secured credit facility and with about $85 million cash on hand.

Allen & Co and BofA Merrill Lynch advised CEB while SHL was advised by Morgan Stanley, Weil, Gotshal & Manges and Deloitte.

CEB’s shares closed at $41.64 on Monday on the New York Stock Exchange. They have gained about 9 percent so far this year.

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