8-K: Atlantic International Corp. to Acquire Staffing 360 Solutions in $25 Million Merger

Atlantic International Corp. and Staffing 360 Solutions, Inc. have agreed to merge, creating a combined human capital management and workforce solutions company with approximately $620 million in annual revenue.

Summary

• Atlantic International Corp. will acquire all outstanding shares of Staffing 360 Solutions, Inc. in a merger valued at approximately $25 million.
• Staffing 360 shareholders will receive 1.202 shares of Atlantic stock for each share of Staffing 360 stock they own.
• Post-merger, Atlantic and Staffing 360 shareholders will own approximately 90% and 10%, respectively, of the combined company on a fully diluted basis.
• The combined company is expected to have an annual revenue run rate of approximately $620 million.
• The merger is anticipated to generate approximately $10 million in run-rate cost synergies and savings.
• The transaction is expected to close within the next 90 days, pending shareholder and regulatory approvals.
• Staffing 360 will operate as a wholly-owned subsidiary of Atlantic, retaining its current leadership and brand.
• Atlantic CEO Jeffrey Jagid will remain CEO of the combined company, while Staffing 360 CEO Brendan Flood will become President of Staffing 360 Solutions.

Sentiment

Score: 8

Explanation: The document expresses a positive outlook on the merger, highlighting the anticipated benefits and synergies. The language used is optimistic and forward-looking, suggesting a high level of confidence in the success of the transaction.

Positives

• The merger is expected to enhance the scale and liquidity of the combined company, potentially leading to a premium valuation.
• The combined entity is expected to have an improved cost structure and decreased operating expense ratio.
• The merger will create a more diversified customer base, reducing reliance on any single client.
• The combined company will have an expanded suite of services and a broader geographic reach.
• The merger is expected to enhance professional opportunities for the combined organization.

Risks

• The transaction may not close on the anticipated terms or timeline, or at all.
• The combined company may not be able to successfully integrate the two businesses or achieve the anticipated synergies.
• There is a risk of potential litigation related to the merger.
• The merger could disrupt the businesses of Atlantic and Staffing 360.
• There is a risk that the combined company may not be able to retain or hire key personnel.
• The merger could lead to adverse reactions or changes in business relationships.
• There is uncertainty regarding the long-term value of Atlantic common stock.
• The combined company may face challenges in securing capital and financing.
• Legislative, regulatory, and economic developments could negatively impact the combined company.
• Catastrophic events, such as acts of terrorism or war, could pose a risk to the combined company.

Future Outlook

The combined company aims to build a multibillion-dollar diversified services company through organic growth and M&A. The merger is expected to enhance the scale, liquidity, and capital alternatives of the combined company, potentially leading to a premium valuation. The combined company will serve more than 1,500 customers, with no customer generating more than 5% of total revenue.

Management Comments

• Atlantics CEO Jeffrey Jagid stated that the merger provides a unique opportunity to increase business by approximately 50 percent and become a bigger force in the staffing sector.
• Staffing 360s CEO Brendan Flood said that the merger will position the combined company to deliver enhanced levels of service to a growing number of companies.

Industry Context

This merger reflects a trend towards consolidation in the human capital management and workforce solutions industry, as companies seek to achieve greater scale, efficiency, and market reach. The combined entity will be a significant player in the staffing sector, competing with other large national staffing companies.

Comparison to Industry Standards

• The document mentions that larger capitalized human capital management and workforce solutions companies have historically carried premium valuations, suggesting that the combined company aims to achieve a similar valuation.
• The combined company will serve more than 1,500 customers, with no customer generating more than 5% of total revenue, indicating a diversified customer base which is a positive attribute in the staffing industry.
• Atlantic is among the top 20 largest national staffing companies, and the merger with Staffing 360 will further solidify its position in the market.

Management Changes

Stakeholder Impact

• Shareholders of both Atlantic and Staffing 360 are expected to benefit from the merger through enhanced scale, liquidity, and potential premium valuation.
• Employees of both companies may experience enhanced professional opportunities and a more stable work environment.
• Customers of both companies will have access to a broader suite of services and a more diversified service provider.
• The merger is expected to create a stronger and more competitive company, which could benefit suppliers and other stakeholders.

Next Steps

• Staffing 360 will hold a special meeting of shareholders to vote on the merger.
• The companies will seek regulatory approval for the transaction.
• The record date and meeting date for the shareholder vote will be communicated after SEC approval of proxy materials.
• The companies will work towards closing the transaction within the next 90 days.

Key Dates

Keywords

merger, acquisition, staffing, human capital management, workforce solutions, outsourced services, synergies, revenue, cost savings, shareholders