Kforce and Hall Kinion Merger to Proceed Under Revised Terms
April 06 2004 - 7:00AM
PR Newswire (US)
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/
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