Gartner acquires consulting firm CEB for $2.6 billion

Analyst house Gartner will acquire talent management and consulting firm CEB in a cash and stock transaction valued at approximately US$2.6 billion.

Gartner services covering IT, supply chain and marketing will be combined with CEB’s services in HR, sales, finance and legal to cover all major functions of the enterprise.

The combined company will “provide a comprehensive and differentiated suite of advisory services aligned to the mission-critical priorities of virtually all functional business leaders across every industry and size of enterprise worldwide.”

“We are excited about joining forces with CEB, a world-class company we have long admired. Our highly complementary business models will create the leading global research and advisory company for all major functions in the enterprise,” said Gene Hall, CEO of Gartner. “We look forward to working with CEB’s highly talented teams to leverage our global reach and apply Gartner’s proven operational and sales execution capabilities at scale to accelerate growth across CEB’s businesses.”

On a pro forma basis, the combined company’s reported results for the last 12 months ended September 30, 2016 include approximately $3.3 billion in revenue, $693 million in adjusted earnings before interest, taxes depreciation and amortization (EBITDA), and $463 million in free cash flow. Together, Gartner and CEB will employ more than 13,000 associates serving clients in more than 100 countries worldwide.

Under the terms of the agreement, CEB shareholders will receive $54.00 in cash and 0.2284 shares of Gartner common stock for each share of CEB common stock they own, implying 70 per cent cash and 30 per cent stock consideration for the offer. Upon completion of the transaction, Gartner shareholders will own approximately 91 per cent of the combined company.

“The combined company will have unmatched insight into technology, talent and the other drivers of corporate performance. It will also have deep reach into a massive, immediately addressable market with clear need for our support across a range of functional areas,” said Tom Monahan, chairman and CEO of CEB.

“CEB employees will benefit from being part of a diversified and growing global organisation with enhanced opportunities for career growth and development. We look forward to working with the Gartner team to accelerate our growth and scale our impact on members and clients.”

The deal has been unanimously approved by the boards of both companies and is expected to close in the first half of 2017. The transaction is immediately accretive to Gartner’s adjusted EPS and is expected to be double-digit percentage accretive in 2018.

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