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Spherion Acquires Tatum

Spherion Acquires Tatum

Spherion Corporation has announced the acquisition of Tatum, LLC (Tatum), a leading executive services firm focused on the office of the chief financial officer (CFO). Total consideration for the transaction is $46 million, comprised of $11 million in Spherion stock and the remainder in cash and assumed liabilities.

Commenting on the Tatum acquisition, Spherion president and CEO Roy Krause noted, "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. Tatum is well-known for their deep expertise and focus on the CFO and will complement our existing professional services business. As a result of this transaction, professional services revenues account for approximately 44% 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. We welcome the addition of Tatum's senior management team to the Spherion family and look forward to their contributions as we become a leader in the C-level interim and consulting marketplace."

"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, "Tatum's focus on value-added services fits perfectly with Spherion's commitment to delivering service excellence. 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."

SYNERGIES AND VALUATION
Tatum's field operations will remain independent and its back-office operations will be consolidated into Spherion's existing service center. The integration and consolidation are expected to be substantially completed by March 31, 2010.
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 5.5x 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% - 75% of the $6 million cost synergies, Tatum should be approximately $0.03 to $0.05 per share accretive to Spherion in 2010.

TRANSACTION DETAILS
Spherion will fund the transaction by utilizing its existing cash resources and revolving line of credit and by issuing approximately 1.8 million shares of Spherion common stock. Total borrowings after closing will be approximately $45 million with debt to capitalization of less than 15%.

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