By Kristin Jones
Corporate Executive Board Co. (EXBD) has agreed to acquire
privately held U.K.-based talent-testing company SHL for $660
million in cash as it seeks to expand its market.
Corporate Executive Board is a provider of business research and
analysis, while SHL provides testing for companies worldwide,
counting corporations like Coca-Cola Co. (KO) and Hilton Worldwide
among its clients.
HgCapital took SHL private in a buyout worth $187 million in
2006. Since then, the company has grown from a market leader in
testing and services in Europe and Asia to a global company, helped
by its acquisition of the U.S. market leader PreVisor in January
2011. Veronis Suhler Stevenson became a co-investor at the time of
the PreVisor deal.
The acquisition of SHL, which is subject to preclosing and
postclosing adjustments, will add to the addressable market of both
companies through an increased global presence, the companies
said.
"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,"
said CEB Chief Executive Tom Monahan.
The deal is expected to increase CEB's full-year earnings in
2013 and generate pretax cost synergies of $5 million starting in
2013. CEB expects cash flow to remain sufficient to maintain the
company's current policy of dividend growth.
The company intends to fund the acquisitions with borrowings
under a new $625 million credit facility, along with $85 million of
cash in hand.
CEB affirmed its full-year 2012 outlook as it relates to the
existing business and plans to issue updated guidance for the
combined company once the deal is completed.
SHL's revenue was $209.8 million in 2011, while its adjusted
earnings before interest, taxes, depreciation and amortization were
$56.9 billion. CEB's revenue was $484.7 million in 2011, and its
adjusted earnings before interest, taxes, depreciation and
amortization were $116.6 million.
CEB shares closed at $41.64 Monday and were inactive
aftermarket. The stock is up 9.3% so far this year.
Write to Kristin Jones at kristin.jones@dowjones.com