Corporate Executive Board Agrees to Buy SHL for $660 Million in Cash

   By Kristin Jones 
 

Corporate Executive Board Co. (EXBD) has agreed to acquire privately held U.K.-based talent-testing company SHL for $660 million in cash as it seeks to expand its market.

Corporate Executive Board is a provider of business research and analysis, while SHL provides testing for companies worldwide, counting corporations like Coca-Cola Co. (KO) and Hilton Worldwide among its clients.

HgCapital took SHL private in a buyout worth $187 million in 2006. Since then, the company has grown from a market leader in testing and services in Europe and Asia to a global company, helped by its acquisition of the U.S. market leader PreVisor in January 2011. Veronis Suhler Stevenson became a co-investor at the time of the PreVisor deal.

The acquisition of SHL, which is subject to preclosing and postclosing adjustments, will add to the addressable market of both companies through an increased global presence, the companies said.

"SHL's established global customer base and rich talent analytics, its leadership position in corporate-talent measurement and its proven business model--which delivers highly recurring revenues, attractive sustainable margins and strong cash flows--make it a compelling strategic and financial fit for CEB," said CEB Chief Executive Tom Monahan.

The deal is expected to increase CEB's full-year earnings in 2013 and generate pretax cost synergies of $5 million starting in 2013. CEB expects cash flow to remain sufficient to maintain the company's current policy of dividend growth.

The company intends to fund the acquisitions with borrowings under a new $625 million credit facility, along with $85 million of cash in hand.

CEB affirmed its full-year 2012 outlook as it relates to the existing business and plans to issue updated guidance for the combined company once the deal is completed.

SHL's revenue was $209.8 million in 2011, while its adjusted earnings before interest, taxes, depreciation and amortization were $56.9 billion. CEB's revenue was $484.7 million in 2011, and its adjusted earnings before interest, taxes, depreciation and amortization were $116.6 million.

CEB shares closed at $41.64 Monday and were inactive aftermarket. The stock is up 9.3% so far this year.

Write to Kristin Jones at [e-mail]