International recruitment firm Hays has acquired 80% of Veredus Corp (“Veredus”), for an initial consideration of approximately circa £28 million ($44.0 million), on a cash free / debt free basis. The remaining 20% of equity in Veredus will be retained by the selling shareholders, all of whom will continue in their senior leadership roles within the Hays USA business.

Hays has the option to acquire the remaining 20% from the selling shareholders. This option is first available for exercise in March 2018, at a pre-determined multiple of earnings, and is subject to a cap.

Veredus is a pure-play IT staffing company that generates c.85% of its net fees from contracting and temporary assignments and c.15% from Perm placements. Established in 2000, it is headquartered in Tampa, Florida, with 10 offices focused in the South East and Mid-West of the USA. It has 150 employees and over 700 contractors currently active on assignments with a broad range of clients, and in the last year made placements across 30 states.

Veredus made adjusted EBITDA in the year ended 31 June 2014 of circa £4.2 million. ( $6.7 million) which, after taking account of net debt within the business at the time of the transaction of circa $4 million, implies a multiple of 9x earnings. After taking account of deal associated costs which, in line with accounting rules, will be 100% expensed in the year, it is expected that the transaction will have a minimal impact on the Group’s earnings for the year to June 2015.

Commenting on the transaction, Alistair Cox, Hays CEO, said “I am delighted to announce this important transaction for Hays. Since entering the US market in late 2010, the Hays business has rapidly expanded, providing specialist recruitment services in the Life Sciences and Oil & Gas sectors, with offices in New York and Houston. Veredus’ clear, market-leading focus on IT Contracting and their established platform across the South East and Mid-West, alongside deep existing client relationships across a range of sectors makes it highly complementary to our existing North American and global operations.

“The acquisition of Veredus provides the ideal platform for us to import our complementary recruiting expertise and relationships from across the Group, driving diversified growth and better serving our many clients for whom the USA is a key market. By adding the existing market-leading business and quality leadership team that Veredus brings, we enter the next phase for Hays in the USA with a clear plan to significantly accelerate our growth trajectory in this key market. I welcome the entire Veredus team to Hays and look forward to a long and successful shared future.”

The announcement follows the announcement of strong net income growth in all regions for the first quarter ending 30 September 2014. 

According to Staffing Industry Analysts Research, Hays is ranked as the third largest staffing firm in the UK and the sixth largest in the world