March 20 (Bloomberg) -- On Assignment Inc., the provider of temporary workers to technology and health-care companies, agreed to purchase information technology staffing firm Apex Systems Inc. for $600 million.
On Assignment, based in Calabasas, California, will acquire all of closely held Apex Systems’ equity for $383 million in cash and $217 million in new stock, according to a statement today. The transaction, expected to close in May, will almost double the size of the company and create the second-largest IT staffing firm in the U.S., On Assignment said.
“The U.S. labor markets are becoming more in tune with using contract labor,” Peter T. Dameris, On Assignment’s chief executive officer, said in a telephone interview. “Layer on top of that the adoption of technology and the supply and demand imbalance of people who are knowledgeable about that technology, and that drives people to contract labor even more.”
The strength of the debt markets and the company’s confidence in the improving U.S. economy provided another part of the reasoning for the acquisition, Dameris said.
On Assignment obtained a commitment for a new $540 million senior secured credit facility from Wells Fargo & Co., Bank of America Corp. and Deutsche Bank AG, according to the statement.
“Not only was it a good time based on what we’re seeing in our businesses, but the access to capital and the cost of capital is very strong right now,” Dameris said. Apex’s founders will own about 29 percent of On Assignment after the deal closes, he said.
The takeover is On Assignment’s biggest since it went public in 1992, according to data compiled by Bloomberg. In 2007, the company bought Oxford Global Resources Inc., a provider of technology and engineering consultants, for $196.6 million, its second-largest deal.
On Assignment and Apex first discussed a deal in 2010. The latest talks, which were exclusive, began in December.
Moelis & Co. was On Assignment’s financial adviser, while Latham & Watkins LLP served as its legal counsel. Apex Systems, based in Richmond, Virginia, received financial advice from Wells Fargo and legal counsel from Troutman Sanders LLP.
To contact the editor responsible for this story: Jennifer Sondag at firstname.lastname@example.org