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Wells Fargo to Provide $975MM Facility for On Assignment Acquisition

May 11, 2015, 07:32 AM
Filed Under: Staffing Services

On Assignment, Inc., a leading global provider of diversified professional staffing solutions, announced today that it has signed a definitive agreement to acquire privately-held Creative Circle, LLC for $570 million in cash and equity, and up to an additional $30 million based on future operating performance. With the addition of Creative Circle, On Assignment will be able to provide broader staffing services that support its clients as they transform their business models and marketing demands towards digital enterprises. The acquisition is expected to be immediately accretive to On Assignment’s GAAP earnings per share and adjusted earnings per share (without any synergy savings) in 2015.

Creative Circle is one of the largest digital/creative staffing firms in North America and provides digital, marketing, advertising, and creative talent to both creative agencies and marketing departments of leading companies. Creative Circle has achieved a three- year compounded annual growth rate of 26% since 2011. In 2014, the company had approximately $226 million in revenues with an EBITDA margin of approximately 21%. Creative Circle expects to achieve double-digit top line growth in 2015.

“Technology has accelerated digital innovation and the way consumers access content. As such, our clients are faced with the need to remain competitive by transforming their business models to effectively respond to consumer demand for digital information and services on a real time basis,” said Peter T. Dameris, On Assignment’s President and Chief Executive Officer. “By working together, we can do more for our clients to accelerate their transformation to a digital platform by providing our respective clients with a more complete solution in the technology and digital/creative space.

Under terms of the definitive agreement, On Assignment will acquire all of Creative Circle’s equity for consideration of $570 million to be paid at closing, plus additional consideration of up to $30 million if certain performance targets for 2015 are achieved. The consideration at closing is comprised of $540 million in cash and $30 million of common stock.

In connection with the transaction, On Assignment has obtained a secured financing commitment for $975 million from Wells Fargo Bank, National Association. The new credit facility consists of a $100 million revolving credit facility (undrawn at close) and an $875 million term loan. The proceeds of the term B loan will be used to finance the cash portion of the purchase price and refinance existing On Assignment debt. Upon closing of the transaction, funded debt of the combined company is expected to total approximately 3.7x estimated pro forma adjusted EBITDA for the twelve months ended June 30, 2015.

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