CWS 3.0: June 4, 2014

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Acquisitions, rumored deals, more options for buyers

TrueBlue Inc., the fifth-largest industrial staffing firm in the U.S. announced plans to acquire No. 12-ranked Seaton. Meanwhile, Cross Country Healthcare Inc., the fourth-largest healthcare staffing provider in the U.S., is set to acquire Medical Staffing Network, the sixth-largest.

These acquisitions and other recent events are a sign of the dynamic nature of the market and industry, says Bryan Peña, Staffing Industry Analysts’ vice president of Contingent Workforce Strategies and Research.

TrueBlue/Seaton. The Seaton deal is particularly noteworthy, Peña says. TrueBlue Inc. will pay about $310 million for the Chicago-based firm, which in turn posted revenue of $606 million in 2013.

Seaton’s more than 140 clients include Burger King, Delta, Covance and Walmart, according to an investor presentation. It operates through three divisions:

  • Staff Management — A provider of high-volume, vendor-on-premise staffing and managed service provider services.
  • PeopleScout — A provider of recruitment process outsourcing.
  • StudentScout — A provider of admissions process outsourcing aimed at bringing students to schools.

Its MSP and outsourcing components are what make the deal so noteworthy to many larger buyers, Peña says. The MSP model, which has been so successful for Fortune 500 companies, has been slower to penetrate the light industrial space, Peña notes. With this acquisition, TrueBlue gains synergies that will enable it to offer increased value to industrial buyers. “It will be interesting to see whether and how TrueBlue will integrate the managed service provider services components of Staff Management into its broader business strategy, Peña says.

“The use of recruitment process and workforce management outsourcing is growing quickly,” said TrueBlue CEO Steve Cooper. “Adding PeopleScout and Staff Management | SMX dramatically expands TrueBlue’s ability to provide these services to customers and also adds to the company’s long-term growth potential.”

Seaton’s brands and management teams will remain in place. It will operate as a wholly-owned subsidiary of TrueBlue, and the combined businesses will operate as two groups: staffing solutions and outsourced solutions.

Cross Country/MSN. Medical Staffing Network provides per diem, local, contract, travel, and permanent hire staffing services. MSN reported $229 million in revenue for 2013; Cross Country posted $438 million in revenue in 2013.

The acquisition increases Cross Country’s branch count to more than 70 locations from 29. About 11 branches overlap and will be consolidated, likely by the end of 2014 or early 2015.

MSN also diversifies Cross Country’s customer base, adds new service lines, provides cross-selling opportunities, and will help the company improve MSP fill rates, according to the company.

“Simply stated, we will be better positioned to meet our clients’ desires with a more integrated solution provider with a full suite of services,” Cross Country Healthcare President and CEO William Grubbs said in a conference call with investors.

This is Cross Country’s second acquisition in six months; in December the company purchased the allied healthcare staffing business of On Assignment Inc. for $28.7 million.

This is an exciting time in the market, Peña says, noting there a number of rumored deals to come that speak to the dynamic nature of the time in the industry.