Market Commentary and Intraday News

Corporate Executive Board shares jump on SHL deal

325 days ago

(AP:ARLINGTON, Va.) Shares of research firm Corporate Executive Board Co. jumped to their highest level in more than four years Tuesday, after revealing plans to buy talent company SHL for $660 million in cash.

THE SPARK: The Arlington, Va., company said it will significantly increase its customer base with the acquisition, boost its global presence, lower costs and expand its lineup of services. Earnings next year will get a boost and there will be an estimated $5 million in annual pre-tax cost savings starting as well.

THE BIG PICTURE: The company, which is based in London and owned by private investment firm Veronis Suhler Stevenson, provides companies with employee assessment and testing services to assist them with hiring and recruiting, employee development and succession planning. It has a presence in over 50 countries and delivers more than 25 million employee assessments each year in more than 30 languages.

SHL's 2011 revenue totaled $209.8 million, while Corporate Executive Board's totaled $484.7 million.

The deal, subject to regulatory approval, is being funded by a new $625 million secured credit facility and $85 million in cash. It is expected to close in the third quarter of 2012.

THE ANALYSIS: Stifel Nicolaus analyst Shlomo Rosenbaum backed his "Buy" rating and $49 price target for the company.

"We believe this acquisition will accelerate Corporate Executive Board's organic growth rate, and expect management to increase its longer-term organic growth targets in the second half of 2013 (when the integration is largely complete)," Rosenbaum wrote.

THE SHARES: Up $4.79, or 12 percent, to $46.43 after peaking at $47.77 earlier in the day. The jump marked the company's highest stock price since early 2008.

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