Kforce and Hall Kinion Announce Execution of Merger Agreement
December 02 2003 - 5:56PM
PR Newswire (US)
Kforce and Hall Kinion Announce Execution of Merger Agreement
TAMPA, Fla. and NOVATO, Calif., Dec. 2 /PRNewswire/ -- Kforce Inc.
and Hall, Kinion & Associates, Inc. , announced that they have
executed an Agreement and Plan of Merger today. The merger, which
is to be accomplished through a stock-for-stock exchange, is
expected to further establish Kforce as a premier provider of
professional staffing and will provide candidates and clients with
expanded market presence and an enhanced ability to provide the
right match. 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 $650 million with approximately 1,400
staff and 8,000 consultants on assignment at over 3,000 clients.
"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," said
David L. Dunkel, Chairman and Chief Executive Officer of Kforce
Inc. "We expect shareholders to gain from the diversity of revenues
and increased earnings momentum. Clients and candidates will
benefit from one of the most extensive professional staffing firms
in the nation with a strong commitment to exceptional service. Hall
Kinion(R) brings a very talented and entrepreneurial team that
shares Kforce's belief that great people equal great results. We
welcome Hall Kinion into the Kforce family." "Joining Kforce is a
great opportunity for our shareholders, our customers and our
employees alike," stated Brenda C. Rhodes, Chairman and Chief
Executive Officer of Hall Kinion. "Our shareholders will
participate in the expected overall growth of the combined entity.
Our customers will continue to receive the level of exceptional
customer service they have come to expect while benefiting from the
expanded Kforce line of staffing services. Our employees will
benefit from the enhanced career opportunities that come from being
part of a larger organization. We are very excited to become part
of the Kforce team." Stronger Market Presence "Brenda Rhodes and
her management team at Hall Kinion have built a highly successful
business that has grown organically and through successfully
integrated acquisitions. Their talented sales professionals with
their commitment to deliver exceptional service will be an
excellent match with our sales team and culture. We believe our
complementary strengths in technology and financial services,
products and clientele will provide opportunities for growth and
cross-selling across the client spectrum," Dunkel added. "The Hall
Kinion brand is highly regarded in IT staffing and particularly in
serving clients on the West Coast. Their sales professionals have
developed expertise and resources in products and geographies that
are complementary to ours. Together, this will result in an IT
staffing capability that will more effectively differentiate our
value proposition," Dunkel stated. "Hall Kinion's OnStaff(R)
division, which is active in consumer finance and mortgage driven
clients, will complement our finance and accounting teams with
little overlap. We believe the combination will provide both
business units the platform to satisfy clients and candidates with
an expanded portfolio of product offerings to achieve the right
match. We expect OnStaff will continue to manage its business by
investing in and introducing new products and services that
leverage its existing infrastructure," Dunkel continued. Improved
Revenues and Earnings "We believe the combined company will feature
higher revenue levels and improved earnings momentum. We also
believe the merger will allow Kforce, which has emerged in recent
years as a leader in creating operating leverage as evidenced by
Kforce's industry leading DSO's (days sales outstanding) and SGA
expense levels, to continue to apply this expertise at scale," said
Bill Sanders, Chief Operating Officer. "Furthermore, we believe
that economies of scale, process improvements and the elimination
of public company and other administrative costs will result in
significant overall cost savings and will improve cash flow. We
expect no sales associates to be eliminated as a result of the
transaction. Also, a number of corporate opportunities may be
available to those willing to relocate to Tampa." "The merger
should be accretive in 2004. We expect the integration to be
completed in the first half of 2004 and thereafter to contribute to
the earnings momentum that we have created this year," Sanders
stated. "Additionally, we believe the proposed transaction has the
potential to offer substantial value creation for the shareholders
of both companies. The merger will improve Kforce's liquidity and
trading fundamentals creating a stronger public company with better
capital market access," Sanders added. Financial Terms and other
Information Under the terms of the merger agreement, Kforce will
acquire all of the shares of Hall Kinion in exchange for shares of
Kforce common stock. The definitive exchange ratio is 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, then the
exchange ratio will equal .60, which will result in Hall Kinion
stockholders owning approximately 19.5% of the fully-diluted
outstanding shares of Kforce common stock following the merger. If
the Kforce stock market value is equal to or greater than $9.60,
then the exchange ratio will be $5.75 divided by the Kforce stock
market value. If the Kforce stock market value is less than $7.09,
then the exchange ratio will be $4.25 divided by the Kforce stock
market value. Kforce may elect to terminate the merger agreement if
Hall Kinion's consolidated revenues for the fourth quarter of 2003
are below $34 million or if the Kforce average closing stock price
remains below $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 both Kforce shareholders and Hall Kinion
shareholders and certain regulatory clearances, including
effectiveness of a registration statement registering the common
stock to be issued to Hall Kinion shareholders and other customary
closing conditions. The merger has been unanimously approved by the
boards of directors of both Kforce and Hall Kinion. Lehman Brothers
provided a fairness opinion to Kforce in this transaction, while
Robert W. Baird & Co. Incorporated advised and provided a
fairness opinion to Hall Kinion. Kforce intends to file with the
SEC a registration statement on Form S-4, which will include a
joint proxy statement/prospectus of Kforce and Hall Kinion in
connection with the proposed transaction. The joint proxy
statement/prospectus will be mailed to the Kforce shareholders and
Hall Kinion shareholders. Investors and shareholders of Kforce and
Hall Kinion are urged to read the joint 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 joint proxy statement/prospectus when it is
available at the SEC's Web site at http://www.sec.gov/. A free copy
of the joint proxy statement/prospectus may also be obtained from
Kforce by directing such requests to Michael Blackman, or from Hall
Kinion by directing such requests to Martin Kropelnicki. Kforce,
Hall Kinion and their respective executive officers and directors
may be deemed to be participants in the solicitation of proxies
from shareholders of Kforce and Hall Kinion with respect to the
transactions contemplated by the merger 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 joint proxy statement/prospectus. Information regarding Hall
Kinion's officers and directors is included in Hall Kinion's Proxy
Statement for its 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 Stockholders 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. Conference Call In conjunction with this announcement, the
companies are hosting a conference call on December 3, 2003, at
8:30 a.m. EST, to discuss the proposed transaction. Access to the
call is available by dialing 706-679-8240 and entering the
conference call pass code: 5522927. 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 10.30 a.m. EST, Wednesday, December 3,
through midnight December 31, 2003. To access the conference call
replay please dial 706-645-9291 and enter conference ID # 4244480.
About Kforce Inc. Kforce Inc. 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 1,000 staffing specialists, Kforce operates in more
than 40 markets in the United States. For more information, please
visit Kforce's 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) 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, whether as 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: Michael Blackman, V.P., Investor
Relations of Kforce Inc., +1-813-552-2927; or Martin Kropelnicki,
V.P. and CFO of Hall, Kinion & Associates, Inc.,
+1-415-895-2200 Web site: http://www.kforce.com/ Web site:
http://www.hallkinion.com/
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