RPO & StaffingTalent Acquisition

Spherion Acquires Tatum

 Spherion Corporation has acquired executive services firm Tatum, for $46 million, comprised of $11 million in Spherion stock and the remainder in cash and assumed liabilities.
"This acquisition represents another step in the execution of our stated strategy of increasing our higher-margin professional services business, while also expanding our presence in the C-level interim and consulting market,” said Spherion president and CEO Roy Krause. “As a result of this transaction, professional services revenues account for approximately 44 percent of total revenue. We also see significant opportunities for revenue growth through our combined relationships, while achieving cost synergies through the reduction of duplicative back-office functionality.”

"Both companies bring unique strengths to this merger," said Rich D’Amaro, chairman and chief executive officer of Tatum. "Tatum will be able to leverage its C-level management and consulting service offerings across a much larger customer base and retain its partnership culture, while relying on Spherion’s back-office infrastructure."

William Grubbs, Spherion’s executive vice president and chief operating officer, added, "With average billing rates of $190 and approximately 650 professionals, including over 400 CFO-level partners, Tatum, in combination with Mergis, Technisource and SourceRight, enhances our capability to provide seasoned CFOs and other highly skilled professionals to solve client challenges."
Once the integration and consolidation are completed, there should be approximately $6 million of annualized cost savings. With this level of cost synergies, Spherion estimates that the purchase price of $46 million is approximately five and one-half times estimated 2009 pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) of Tatum. Assuming 2010 revenues about flat with 2009 ($117 million) and realization of approximately 65 percent to 75 percent of the $6 million cost synergies, Tatum should be approximately $0.03 to $0.05 per share accretive to Spherion in 2010.

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