Equifax will acquire HRO provider TALX in a $1.4 billion stock and cash deal. If completed, this would be the biggest acquisition of an HRO service provider ever. The deal is expected to close within the next two quarters.
According to the companies, the acquisition is aligned with Equifax’s long-term growth strategy of expanding into new markets and acquiring proprietary data sources. The purchase also adds a strong management team to the consumer credit reporting and information management services company.
Based in St. Louis, TALX provides employment verification and related HR and payroll services, serving more than 9,000 clients in the U.S. TALX’s services include employment and income verification, pay reporting, hiring, and employment tax management services. Its Work Number service, has more than 142 million employment records.
During the past three fiscal years, TALX’s revenues and net income have grown at a compounded annual growth rate of 29.1% and 54.9% respectively. Through its fiscal third quarter ended December 31, 2006, TALX reported revenues of $197m, up 33% from the prior year.
Under the terms of the agreement, approved by the boards of directors of both companies, TALX shared holders will receive 75% of the sale in Equifax stock and 25% in cash. TALX shareholders may elect to receive for each TALX share either 0.861 shares of Equifax stock, $35.50 in cash, or a combination of stock and cash of equivalent value, subject to pro-ration so that the total consideration issued for TALX stock consists of 75% Equifax stock and 25% cash.
The acquisition is structured so that the stock portion of the purchase price will be tax-free to selling shareholders. In the aggregate, Equifax will issue approximately 22
million shares of Equifax stock and pay approximately $300 million in cash. Equifax will assume TALX outstanding debt, which was $191.5 million as of December 31, 2006.
Upon closing, TALX CEO William W. Canfield will join Equifax’s senior management team as president of the TALX business unit and be appointed to Equifax’s board of directors.
Source(s): Equifax, TALX