(Reuters) - Korn Ferry’s agreement to buy Hay Group for around $452 million in cash and stock nearly doubles the size of its employee base and puts the combined recruiting company into more than 50 countries, its CEO said on Thursday.
Korn Ferry Chief Executive Gary Burnison said a key factor behind the purchase was tapping into Hay’s overseas reach. Around 80 percent of Hay’s business is done outside the United States, Burnison said in an interview.
“We’re growing our headcount by 70 percent. This deal really is about scale,” Burnison said, adding that the merger would allow Korn Ferry to have a more consistent business across the globe.
Korn Ferry has about 3,900 employees in 78 offices in 37 countries. Hay has about 3,100 employees in 50 countries.
The combined group will consist of two main businesses: talent acquisition and talent advisory, Burnison said.
Once the deal closes, Korn Ferry will combine Hay Group with Korn Ferry’s advisory arm, known as Leadership and Talent Consulting (LTC), and brand the business as Hay Group.
Hay Group CEO Stephen Kaye will oversee that division, Korn Ferry said in a statement.
Korn Ferry will pay Hay Group about $252 million in cash, net of estimated acquired cash, and $200 million in the company’s common stock. The deal is expected to close before year-end, subject to Hay Group shareholder approval and antitrust clearance.
Burnison said he expected some job losses in human resources and administration as part of the estimated $20 million in cost synergies in the first year after the deal closes.
Reporting by Michael Flaherty