Hall, Kinion & Associates (NASDAQ:HAKI)
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Kforce and Hall Kinion Merger to Proceed Under Revised Terms
Terms Include Release of Certain Closing Conditions and Kforce Assumes Operating
Management of Hall Kinion
TAMPA, Fla. and NOVATO, Calif., April 6 /PRNewswire-FirstCall/ -- Kforce Inc.
and Hall, Kinion & Associates, Inc. , professional staffing firms, today jointly
announced that they have executed an Amended and Restated Agreement and Plan of
Merger (the "Amended Agreement") that modifies the terms of the previously
announced proposed merger. Also, effective immediately, Kforce will assume
operating management of Hall Kinion(R) under a management agreement. The
transaction is expected to close in the second quarter of 2004.
David L. Dunkel, Chairman and Chief Executive Officer of Kforce Inc. stated:
"After carefully considering all facts and circumstances, both boards of
directors have now approved a revised transaction. As demonstrated by their
outstanding integration efforts to date, what initially attracted us to Hall
Kinion remains. It starts with quality people selling and servicing customers.
This merger is about the combined capabilities of two organizations focused on
delivering the right match through exceptional customer service to our clients
and candidates. We expect the combined business to gain from the diversity of
revenues and increased earnings. We also expect clients and candidates to
benefit from a professional staffing firm with even more extensive capabilities,
and a continuing commitment to exceptional service. Hall Kinion brings a very
talented and entrepreneurial team that shares Kforce's belief that great people
equal great results."
"We are pleased to announce the merger is proceeding to conclusion," stated
Brenda C. Rhodes, Chairman and Chief Executive Officer of Hall Kinion. "We are
confident that the completion of this transaction will be beneficial to Hall
Kinion shareholders, employees and clients."
Terms
Under the terms of the Amended Agreement, Kforce will acquire all of the shares
of Hall Kinion in exchange for shares of Kforce common stock under a similar
structure as originally provided, with a change in the exchange ratio, which
remains dependent upon the average of the closing prices of Kforce common stock
for the 15 trading days ending on and including the third trading day prior to
the closing date (such average is referenced herein as the "Kforce stock market
value"). If the Kforce stock market value is equal to or greater than $7.09,
but less than $9.60, the exchange ratio will equal .45 (changed from .60), which
will result in Hall Kinion stockholders owning approximately 15.9% of the
outstanding shares of Kforce common stock following the merger. If the Kforce
stock market value is equal toor greater than $9.60, the exchange ratio will be
$4.32 divided by the Kforce stock market value, which for purposes of this
calculation will now be capped at $10.60, thereby establishing a floor on the
exchange ratio at .4075. Kforce may also now elect to terminate the Amended
Agreement if the Kforce average closing stock price remains below $7.00 (changed
from $6.00) for 15 consecutive trading days at any time prior to the closing.
The proposed transaction requires and is subject to the approval by Hall Kinion
stockholders and certain regulatory clearances, including effectiveness of a
registration statement registering the common stock to be issued to Hall Kinion
stockholders and other customary closing conditions. Under the revised terms,
Kforce shareholders are not required to vote on the transaction. The Kforce and
Hall Kinion boards of directors approved the Amended Agreement at special
meetings.
Public Filings
Kforce intends to file an amendment to its registration statement on FormS-4
originally filed with the SEC on December 24, 2003 and amended on February 9,
2004. The Form S-4 includes a proxy statement/prospectus for Hall Kinion
stockholders that will be mailed shortly after such registration statement
becomes effective. Hall Kinion stockholders are urged to read the proxy
statement/prospectus when it becomes available because it will contain important
information about Kforce, Hall Kinion and the transaction. Any offer of
securities will only be made pursuant to the proxy statement/prospectus.
Shareholders and other investors may obtain a free copy of the registration
statement when it is available at the SEC's web site at http://www.sec.gov/, or
by links after that time from the Kforce (http://www.kforce.com/) and Hall
Kinion (http://www.hallkinion.com/) Web sites. A free copy of the proxy
statement/prospectus may also be obtained from Hall Kinion by directing such
requests to Martin A. Kropelnicki, Chief Financial Officer of Hall Kinion.
Kforce, Hall Kinion and their respective executive officers and directors may be
deemed to be participants in the solicitation of proxies from stockholders of
Hall Kinion with respect to the transactions contemplated by the Amended
Agreement. A description of any interests that Kforce's or Hall Kinion's
directors and executive officers have in the proposed merger will be available
in the proxy statement/prospectus. Information regarding Hall Kinion's officers
and directors is included in Hall Kinion's Proxy Statement forits 2003 Annual
Meeting of Stockholders filed with the SEC on April 11, 2003. Information
regarding Kforce's officers and directors is included in Kforce's Proxy
Statement for its 2003 Annual Meeting of Shareholders filed with the SEC on
April 21, 2003. These proxy statements are available free of charge at the
SEC's web site at http://www.sec.gov/ and from Hall Kinion and Kforce.
Merged Business
The combined companies will operate from approximately 80 offices in 45 markets.
As of today, the combined annual revenue run rate is in excess of $640 million
with over 1,400 associates and approximately 9,000 consultants on assignment at
over 3,000 clients.
"We are well on the way to achieving our objective of an efficient, timely
integration of the two companies," said William L. Sanders, Chief Operating
Officer of Kforce. "Both firms have worked tirelessly towards that goal, and
integration can still be substantially completed by June 30. We continue to be
impressed by the depth and professionalism of the Hall Kinion field
organization. The improving environment increases the momentum for the combined
companies to succeed as we go forward."
Derrell E. Hunter, Chief Financial Officer of Kforce, commented: "As indicated
in December, significant savings are expected from, among other things,
combining a variety of back office and other corporate functions, eliminating
one set of public company related expenses, integrating technology platforms and
functions, and combining certain physicalfacilities. However, Kforce does not
plan to make any reductions in revenue generating associates including sales,
service delivery and recruiting personnel. The normalized effects of cost
synergies, net of the amortization of identifiable intangibles, are expected to
exceed $2 million per quarter. Transaction, personnel severance, office closure
and other related cash costs will be appropriately accounted for along with the
stock value as purchase price. As expected, certain merger-related period costs
were incurred in Q1, and additional amounts will be incurred during Q2. In Q3,
the effects of non-recurring period costs should be substantially behind us and
many of the normalized effects of synergies should occur. We therefore expect
that the transaction will be accretive to Kforce's earnings per share in the
third quarter of 2004 and thereafter."
Conference Call
In conjunction with this announcement, Kforce and Hall Kinion are hosting a
joint conference call on April 6, 2004 at 11:00 a.m. ET, to discuss the proposed
transaction. Access to the call is available by dialing 617-786-2961 and
entering pass code: 64972358. Access is also available via Kforce's web site:
http://www.kforce.com/ and Hall Kinion's web site: http://www.hallkinion.com/.
A replay of the conference call will be available from 1:00 p.m. ET, Tuesday,
April 6, 2004, through midnight April 13, 2004. To access the conference call
replay please dial 617-801-6888 and enter pass code: 58120261.
About Kforce Inc.
Kforce is a professional staffing firm providing flexible and permanent staffing
solutions for organizations in the skill areas of information technology,
finance & accounting, pharmaceutical, healthcare and scientific. Backed by more
than 1,200 staffing specialists, Kforce operates in 45 markets in North America.
For more information, please visit our web site at http://www.kforce.com/.
About Hall, Kinion & Associates, Inc.
Hall, Kinion & Associates, Inc., The Talent Source(R) for specialized
professionals, delivers world-class talent on a contract and full-time basis to
high-demand sectors. Hall Kinion finds, evaluates and places industry-specific
Technology and Corporate Professionals. Founded in 1991, Hall Kinion completed
its initial public offering in 1997. Hall Kinion operates two divisions, both
of which provide consultants and direct-hire talent: The Technology
Professional Division places highly-skilled experts in positions ranging from
software engineering to CTO into technology, financial services, healthcare,
government and energy sectors; and the Corporate Professional Services Division
(OnStaff(R)) places specialists at all levels into real estate, financial
services and healthcare sectors. For the most current corporate and financial
information, visit Hall Kinion's web site at http://www.hallkinion.com/.
Certain of the above statements contained in this press release are
forward-looking statements that involve a number of risks and uncertainties.
Such forward-looking statements are within the meaning of that term in Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. The words "should," "believe," "estimate,"
"expect," "intend," "anticipate," "foresee," "plan" and similar expressions and
variations thereof identify certain of such forward-looking statements, which
speak only as of the dates on which they were made. In particular, statements
of expected synergies, accretion, projected results of operations, revenue
run-rate and cash flow, timing of closing and execution of integration plans are
all forward-looking statements. Kforce and Hall Kinion undertake no obligation
to publicly update or revise any forward-looking statement, whetheras a result
of new information, future events or otherwise. As a result, such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and actual results may differ materially from those
indicated in the forward-looking statements as a result of various factors.
Although Kforce and Hall Kinion believe that the assumptions made in connection
with the forward-looking statements are reasonable, no assurances can be given
that their assumptions and expectations will prove to have been correct.
Readers are cautioned not to place undue reliance on these forward-looking
statements. Factors that could cause actual results to differ materially
include the following: business conditions and growth in the staffing industry
and general economy; competitive factors, risks due to shifts in the market
demand, including, without limitation, shifts in demand for Kforce's Health and
Life Sciences, Finance and Accounting and Information Technology Groups, as well
as the market for search and flexible staffing assignments; and shifts in demand
for Hall Kinion's Technology Professional Division and Corporate Professional
Services Division; changes in the service mix; ability of the companies to
complete this merger; the ability of Kforce to successfully integrate this
merger; and the risk factors listed from time to time in Kforce's and Hall
Kinion's reports filed with the Securities and Exchange Commission, as well as
assumptions regarding the foregoing.
DATASOURCE: Hall, Kinion & Associates, Inc.
CONTACT: Martin A. Kropelnicki, V.P. and CFO of Hall, Kinion
& Associates, Inc., +1-415-895-2200; or Michael Blackman, Vice
President - Investor Relations of Kforce Inc., +1-813-552-2927
Web site: http://www.kforce.com/
Web site: http://www.hallkinion.com/