plans to acquire Charlotte-based IT resourcing and service firm ettain
in a $925 million deal, the companies announced Tuesday.
The all-cash deal calls for ManpowerGroup to acquire all of ettain’s equity. The company plans to fund the transaction with cash on-hand and $150 million from its revolving credit facility. The deal could close as early as September.
Once the deal closes, ettain, which provides staffing and consulting services, will become part of ManpowerGroup’s Experis brand.
"As companies amplify their investments in technology, demand for the IT skills that Experis provides is accelerating too,” said Becky Frankiewicz, president of ManpowerGroup North America. “That's why we look forward to welcoming ettain's talented team to ManpowerGroup. Their impressive growth, proven leadership and winning culture will enable us to extend our capabilities, providing greater solutions expertise and more skilled talent to our clients as well as wider IT opportunities to our Experis consultants across North America.”
ettain had around $724 million in revenue for the 12 months ending June 30 and EBITDA of $75 million. The company has particular strength in financial services, health care IT, government and technology markets.
Manpower executives noted there is little client, segment or geographic overlap between the two companies.
"We're pleased to be announcing the acquisition of ettain, which accelerates our strategy of diversifying our business mix into higher growth and higher value services, continuing the expansion of our U.S. and global Experis IT resourcing and services business,” said Jonas Prising, chairman and CEO of ManpowerGroup.
With ettain, around 39% of Experis revenues will come from North America, up from around 27% prior to the deal.
ManpowerGroup expects to spend around $20 million on integration in the first 12 months following the deal plus another $15 million in transaction costs. Starting in 2023, the company expects to realize around $10 million in cost synergies.
“This is not a big cost takeout play. This really about making sure we set this up for growth appropriately,” said Jack McGinnis, chief financial officer of ManpowerGroup.
ettain’s clients also skew towards what ManpowerGroup calls convenience customers. These are generally smaller businesses that provide higher margins and less volatility for the company compared to enterprise clients, which are generally large, multinational companies where ManpowerGroup makes money based on the larger volume of service it provides.
In an email, McGinnis said the company doesn't expect much local impact from the deal. ManpowerGroup does plan to integrate ettain's back office into operations in Milwaukee but does not expect any significant workforce changes as a result.