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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): APRIL 9, 1998
COMPLETE BUSINESS SOLUTIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MICHIGAN
(STATE OR OTHER JURISDICTION OF INCORPORATION)
0-22141 38-2606945
(COMMISSION FILE NUMBER) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
32605 WEST TWELVE MILE ROAD, SUITE 250, FARMINGTON HILLS, MI 48334
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
(248) 488-2088
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NONE
(FORMER NAME AND FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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Item 5. Other Events
On April 9, 1998 CBSI announced that it had signed a definitive merger
agreement with Claremont Technology Group, Inc. Completion of the merger is
subject to governmental filings and the formal approval of the shareholders of
CBSI and Claremont.
The joint press release issued by CBSI and Claremont is attached as an
exhibit to this Form 8-K.
Item 7. Financial Statements and Exhibits
(c) Press release of the Company dated April 9, 1998
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report to be signed on its behalf by
the undersigned hereunto duly authorized.
By: Complete Business Solutions, Inc.
(Registrant)
Dated: April 9, 1998
By: /s/ Timothy S. Manney
-----------------------------------------
Timothy S. Manney
Executive Vice President of Finance and Administration
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EXHIBIT 99
COMPLETE BUSINESS SOLUTIONS, INC.
32605 W. Twelve Mile Rd.
Suite 250
Farmington Hills, MI 48334
NASDAQ: CBSL
AT CBSL: AT FRB CHICAGO:
Tim Manney EVP Finance and Admin.(248) 848-2203 Jim Ketelsen -- General Info
Gail Lutey Inv./Public Relations (248) 848-2217 Margaret Huebner -- Analysts
email: [email protected] Darcy Bretz -- Media Contact
(312) 266-7800
AT CLAREMONT:
Elise Caffrey Inv. Relations (888) 543-9010
email: [email protected]
FOR IMMEDIATE RELEASE
THURSDAY, APRIL 9, 1998
COMPLETE BUSINESS SOLUTIONS, INC. TO MERGE WITH CLAREMONT
TECHNOLOGY GROUP, INC. FOR APPROXIMATELY $285 MILLION IN STOCK
Claremont Brings Approximately 780 Employees, STRONG CONSULTING AND SOLUTIONS
PRACTICES with a Substantial Western U.S. Client Base.
Combined Revenues Exceed $270 Million (Pro Forma for 1997)
FARMINGTON HILLS, MI., APRIL 9, 1998 -- COMPLETE BUSINESS SOLUTIONS, INC.
[NASDAQ: CBSL] a worldwide information technology (IT) consultant and service
provider to large and medium-sized organizations, today announced the signing of
a definitive merger agreement with Claremont Technology Group, Inc. [Nasdaq:
CLMT] for approximately 7.2 million shares of CBSL common stock, recently valued
at approximately $285 million. Each company's Board of Directors has unanimously
approved the transaction. Completion of the merger is subject to governmental
filings and formal approval of both CBSL and Claremont shareholders and is
expected in the third quarter of this year. Claremont, which had trailing twelve
month revenues of approximately $81 million, is a leading IT systems integration
firm providing services to large and mid-sized corporations and state
governments. Complete Business Solutions expects the merger, which will be
accounted for as a pooling of interests, to be accretive to earnings per share,
excluding merger-related expenses, beginning in its third quarter and
thereafter.
"The merger with Claremont will expand our service offerings and strengthen our
West Coast base in particular," said Raj Vattikuti, Complete Business Solutions'
president and chief executive officer. "In addition, Claremont is strong in ERP
[enterprise resource planning] software implementation and client/server
technology, two areas of strategic emphasis for us. They have a strong public
sector benefits practice with state of the art technology that we expect will
pay off very well in the future and complement our own involvement in this
arena. They also bring consulting experience in business process reengineering
and data warehousing and have an excellent reputation and market penetration in
industries where we have relatively low penetration.
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"As we've already experienced in our recent Costello and Synergy Software
mergers, which are strategically and financially successful, Claremont's clients
are expected to take advantage of our global delivery capabilities for
developing software as well as our Year 2000 services. Claremont's 780 employees
will bring our worldwide total to approximately 4,000."
Jerry Stone, chairman of Claremont Technology Group, indicated, "Our merged
companies will have the opportunity to leverage both of our outstanding skill
sets and reputations with a much broader range of services and global delivery
capability. We are excited about our combined capacity to offer a full spectrum
of IT business solutions which we believe will be a powerful force in the
marketplace."
TERMS OF AGREEMENT
Under the terms of the agreement, and subject to a Hart-Scott-Rodino review
waiting period and other conditions, Claremont shareholders will receive
consideration valued at approximately $27 per share. Based on a recent CBSL
price of $39.3125 per share, Claremont shareholders would receive 0.6868 shares
of CBSL common stock. The exchange ratio will vary between 0.618 and 0.836
shares of CBSL common stock based on CBSL's average price over 20 trading days
prior to final closing of the merger. The transaction is intended to qualify as
a tax-free reorganization. By the vote of Claremont's Board of Directors,
Claremont's shareholder rights plan will not be applicable to this merger.
Claremont will receive an irrevocable proxy covering approximately 37 percent of
CBSL shares, while CBSL will receive an irrevocable proxy covering approximately
10 percent of Claremont shares. CBSL was advised by UBS Securities LLC and
Claremont Technology Group was advised by Donaldson, Lufkin & Jenrette
Securities Corporation each of whom delivered fairness opinions on the financial
aspects of the transaction.
COMBINED STRENGTH IN SERVICES AND SCOPE
Steve Carson, president and chief operating officer of Claremont, added, "We
believe CBSL provides an excellent fit and complement to Claremont. The higher
end consulting business of Claremont, supported by the strong project teams of
CBSL, both in the U.S. and India, will create a company that will allow us to
compete effectively with the strongest firms in our industry. We believe the
combined companies will soon become a role model which others in the industry
will follow."
Claremont Technology Group, Inc., headquartered in Beaverton Ore., has
approximately 780 employees located primarily on the West and East Coasts and
Central United States, with 16 domestic and two overseas offices in Canada and
Australia. Claremont provides a full life-cycle of IT services to vertical
industry markets including manufacturing, communications, financial services and
utilities, as well as the public sector, in particular in the field of benefits
services. Its broad range of systems integration services include IT strategy
and project management, business process reengineering consulting, custom
software development and packaged software implementation, as well as consulting
and implementation for client/server migration. Founded in 1989, Claremont
Technology has grown revenues at a compound annual rate of more than
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40% over the past five years and currently has more than 100 clients. Senior
management will remain with the combined company and all Claremont employees'
current stock incentive programs will transfer to CBSL's compensation and stock
programs. Additionally, Claremont employees will be eligible to participate in
CBSL's stock purchase plan.
"Claremont's services consist of both time and materials and fixed-price
projects," said Tim Manney, CBSL's executive vice president of finance and
administration. "Going forward we'll integrate our business modelS and offer
clients combinations of on-site, off-site or off-shore development. We'll move
appropriate project work to our domestic or off-shore factories to improve
margins. Claremont's revenue base is strong with higher average billing rates
than CBSL. Excluding merger-related expenses, we expect this transaction to be
modestly accretive for 1998 after completion of the transaction, with a stronger
positive impact in 1999 and beyond."
"We can also take advantage of Claremont's recently expanded East Coast
facilities," said Vattikuti. "At the rate we generate new business through our
own customers and our new Synergy and Costello network, we can increase
Claremont's employee utilization rates. We look forward to working with Steve
Carson in implementing the profit improvement measures already begun, and expect
to bring margins in line with our own as quickly as possible.
"Claremont's management will add depth to ours," said Vattikuti. "Its clients
include such well-known names as Lucent, Bank One, Microsoft, Pacificorp and
Weyerhauser, and it has excellent market positions in each of its chosen
industries. There is very little client overlap and we plan to leverage our
combined capabilities. With Claremont's experience in management consulting,
we'll be able to source more business that can be implemented utilizing our
domestic and off-shore factories. Claremont also has a number of alliances and
partnerships which will add to our competitiveness. These include relationships
with Oracle, Bay Networks, Microsoft, Lotus and I2-Technologies."
"As we witness smaller organizations straining under the demands to grow to meet
the tremendous demand for IT services," concluded Vattikuti, "we'll continue to
look for merger opportunities such as this. As the clients of Costello and
Synergy, our recent acquisitions, have already found, there are tremendous
capabilities we bring to the table. A number of their clients have begun to
utilize our off-shore strength or our Year 2000 services. Through this most
recent merger with Claremont, we will have significantly expanded our presence
nationally. Our immediate objective will be to ensure that our merger partners
are integrated into our organization as smoothly as possible to take advantage
of the available synergies. We will move rapidly to consolidate our own
management processes to ensure we continue to grow profitably."
This release contains forward-looking statements relating to future financial
results or business expectations. Business plans may change as circumstances
warrant. Actual results may differ materially as a result of factors over which
the company has no control and other business risks. Such factors include, but
are not limited to: mergers and the ability to integrate acquired businesses on
a timely basis, due diligence processes, significant client assignments,
recruiting and new business solicitation efforts, client and employee retention,
currency exchange rate
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fluctuations, domestic and foreign government regulations, and general economic
conditions. These risk factors and additional information are included in the
company's reports on file with the Securities and Exchange Commission.
ABOUT COMPLETE BUSINESS SOLUTIONS, INC.
CBSL is a worldwide provider of information technology ("IT") services to large
and mid-size organizations. The Company offers its clients a broad range of IT
services, from advising clients on strategic technology plans to developing and
implementing appropriate IT applications solutions. CBSL offers custom-tailored
solutions based on an assessment of each client's needs. The Company's services
include: Year 2000 conversion and testing services; large systems applications
development and maintenance; reengineering legacy applications to client/server
technology; client/server applications development; IT consulting services;
packaged software implementation; and contract programming services. For 1997,
CBSL's revenue increased approximately 33 percent to $123.8 million, from $92.8
million in 1996, both years restated for the acquisition of Synergy Software,
Inc. in November, 1997. Subsequent to the pending merger, the pro forma 1997
revenue would be approximately $275 million.
FOR MORE INFORMATION ON COMPLETE BUSINESS SOLUTIONS, INC.,
VISIT THE COMPANY'S WEBSITE AT WWW.CBSINC.COM
OR DIAL 1-800-PRO-INFO AND ENTER THE TICKER "CBSL"
