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Randstad Holding NV, the world’s second-largest staffing firm, plans to acquire SFN Group Inc. (NYSE: SFN), the world’s 13th-largest staffing firm. The combined company would be the third largest staffing firm in the U.S. — Randstad currently ranks No. 6 and SFN Group No. 7 — based on 2009 estimated U.S. staffing revenue.
Randstad plans to pay $14 per share in cash equaling $771 million, the company reported. The transaction must still be approved by SFN shareholders, but SFN’s board has unanimously approved the deal.
The deal is expected to close in September, according to Randstad.
The companies had combined North American revenue of $4.6 billion in the last 12 months as of March 31, according to Randstad. Total revenue at Randstad in the last 12 months, on a pro forma basis including SFN, would total $22.0 billion.
The deal would make Randstad the second-largest information technology staffing provider in the U.S., based on 2009 estimated revenue. It could also become the second-largest provider of office/clerical staffing. Randstad reported the combined company would be a leader in RPO.
“SFN Group is a great company with professional and dedicated people, a good match with Randstad,” Randstad CEO Ben Noteboom said in a statement. “The future combination will increase opportunities for growth and development of all employees. And by sharing best practices and leveraging the cross selling potential, we will be well-positioned to offer our clients and candidates an unrivaled portfolio of services.”
SFN Group President and CEO Roy Krause said in a telephone interview Wednesday it will be business as usual at SFN for the next 60 days. While the deal still needs shareholder approval, the management team at SFN is committed to making this work as a combination, he said. In addition, plans call for Krause to be involved in the integration of the companies.
“This has happened very quickly,” Krause said. The company wasn’t up for sale, but Randstad approached the company with an offer, and the board evaluated it, he said.
“I think it will give a great opportunity for our employees and our customers,” Krause said. A significant number of U.S. companies have large operations overseas and this merger will allow them to get worldwide services from the combined company, he said.
Randstad posted revenue of €14.18 billion (US$18.79 billion) in 2010, according to its annual report. It had 521,300 staffing employees and 3,085 branches and 1,110 on-premise sites. Based in the Netherlands, Randstad operates in 43 countries.
It’s expected the SFN deal would create $30 million in annual run rate pre-tax cost synergies. The deal would also be immediately accretive to Randstad’s earnings. Randstad plans to finance the deal under its existing credit facility with a group of seven banks.
Randstad’s last major acquisition was in October 2010 when it acquired FujiStaff of Japan, the world’s 38th-largest staffing firm, which had revenue of €461,000,000 (US$620.2 million) in its fiscal year ended March 31, 2010. Randstad also acquired Vedior NV, at that time the fourth-largest staffing firm in the world, in 2008 for €3.51 billion (US$5.41 billion) in cash and stock.
SFN, based in Fort Lauderdale, Fla., posted revenue of $2.05 billion in 2010. It has a network of approximately 560 locations in the U.S. and Canada, according to its annual report. Its operations include temporary staffing (both professional and commercial), direct hire, managed service provider service and recruitment process outsourcing. Much of SFN’s revenue comes from the U.S. with 4 percent coming from Canada.
SFN employs more than 170,000 people annually. Its brands include Technisource, Tatum, The Mergis Group, Todays Office Professionals, SourceRight Solutions and Spherion Staffing Services.
The combined Randstad and SFN would have 1,044 branches and 5,390 internal employees.