Affiliated Computer Services will acquire the human resources consulting and outsourcing businesses (the “HR Business”) of Mellon Financial Corporation (“Mellon”) for approximately $445 million.
For the year ended December 31, 2004, the HR Business recorded revenues of approximately $660 million. The transaction is scheduled to close by the end of the fourth quarter of ACS’ fiscal year 2005 and has been approved by the boards of directors of both companies. Closing is subject to Hart-Scott-Rodino approval as well as other customary closing conditions.
The HR Business serves approximately 3,000 clients and provides consulting services, benefit plan administration services, and multi-scope HR outsourcing services. The consulting business is the seventh largest HR consulting practice in the United States with a strong presence in key U.S. markets and growing capabilities in the UK and Canada. Benefit plan services outsources benefit plans, including defined benefit plans, defined contribution plans, and healthcare plans. In addition, multi-scope HR outsourcing services are delivered in over 50 countries supporting multi-national clients.
“This strategic acquisition makes ACS a stronger competitor in the end-to-end HR marketplace and strengthens our position as a leading global provider of business process outsourcing services,” said Jeff Rich, ACS Chief Executive Officer. “We are gaining new capabilities, adding blue chip clients and talented subject matter experts. The multi-scope HRO marketplace is one of the fastest growing markets we serve, and we are uniquely positioned with strong subject matter experts, an industry leading global production model, and world class information technology skills.”
“Mellon has made significant progress in repositioning the HR consulting and outsourcing businesses for improved profitability and growth. However, these businesses will benefit from ACS, an organization devoted solely to the BPO and IT services industry,” said Martin G. McGuinn, Mellon Chairman and Chief Executive Officer. “This decision was reached after thoroughly reviewing these businesses. We then balanced those findings with the investments required to compete successfully in those businesses with the resources required to build on the strong positions of our other core businesses and achieve our long-term growth goals.”
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