Daily News: March 21, 2012

Wells Fargo, Others Provide Financing for On Assignment Acquisition


On Assignment, Inc. announced that it has signed a definitive agreement to acquire Apex Systems Inc., an information technology staffing and services firm. In connection with the execution of the agreement, On Assignment obtained a commitment for a new $540 million senior secured credit facility from Wells Fargo Bank, Bank of America Merrill Lynch and Deutsche Bank Trust Company Americas. The credit facility provides for a $50 million revolving credit facility and $490 million term loan. The proceeds of the term loan will be used to finance the cash portion of the purchase price, to repay existing indebtedness of On Assignment and Apex Systems and to pay fees and expenses in connection with the transaction.

The transaction will create one of the largest professional staffing firms and the 2nd largest IT staffing firm in the United States. The acquisition is expected to be significantly accretive to On Assignment’s earnings per share, on both a GAAP and cash EPS basis, in 2012 and beyond. On a pro forma basis, 2011 revenue of the combined entity was $1.3 billion.

Privately held Apex Systems is the sixth largest and one of the fastest growing IT staffing firms in the United States. In 2011, Apex Systems had approximately $700 million in revenue and adjusted EBITDA of approximately $65 million. Apex Systems has achieved a compound annual revenue growth rate (CAGR) of 30.4% since 2000 and expects to achieve double-digit top-line growth in 2012.

“Apex Systems becoming part of On Assignment further positions us in the most attractive and fastest-growing segments of the staffing industry,” said Peter T. Dameris, president and chief executive officer of On Assignment, Inc. “Apex Systems’ IT staffing services are complementary to those offered by our existing technology division, Oxford Global Resources. Because the offerings do not compete, the acquisition will create value for our clients, shareholders and employees by expanding our presence in the IT staffing market. The transaction also achieves On Assignment’s five-year strategic plan to reach $1 billion in annual revenue three years ahead of schedule.

The acquisition uniquely positions On Assignment to provide a broader spectrum of IT staffing offerings, from mission critical daily IT services to high-end specialty projects.

Apex Systems will continue to operate substantially as it has in the past. The company’s three co-founders will continue to focus on Apex Systems’ strategy and its high-performance culture as they have done for the last three years, and will also have representation on the On Assignment board of directors. Rand Blazer and Ted Hanson, Apex Systems’ chief operating officer and chief financial officer, respectively, and the rest of the senior management team will remain in place and continue to oversee the day-to-day operations of the business.

Under the terms of the definitive agreement, On Assignment will acquire all of Apex Systems’ equity and retire all of its debt, for a total of $600 million. The purchase price is comprised of $383 million in cash, and newly issued stock valued at $217 million. The transaction is expected to be accretive on both a pro forma GAAP and cash EPS basis in 2012 and beyond, excluding transaction-related costs.

Upon closing of the transaction, funded debt of the combined company will total approximately 3.75x estimated pro forma adjusted EBITDA (as defined below) for the twelve months ended March 31, 2012.

On Assignment, Inc., is a global provider of highly skilled, hard-to-find professionals in the growing technology, healthcare, and life sciences sectors, where quality people are the key to success.