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VARBusiness 500 Integrators Expand Footprint

Top VARBusiness 500 companies are continuing to unite, creating formidable new entities with extended geographical reach and enviable portfolio offerings of their best-of-breed technologies.

Top VARBusiness 500 companies are continuing to unite, creating formidable new entities with extended geographical reach and enviable portfolio offerings of their best-of-breed technologies. In one of the latest deals, Computer Horizons (No. 132 on the 2004 VARBusiness 500) and Analysts International (VB500 No. 109) have announced they will combine in a merger-of-equals transaction that will create a professional IT services firm with combined 2004 revenues of approximately $600 million.

Minneapolis-based Analysts International, the larger of the two companies in terms of revenue, brings to the acquisition table annual sales of more than $330 million received for implementing and managing technology solutions for more than 1,000 clients, including Fortune 50 global firms. Its lines-of-business include technology integration services for applications and hardware; advisory services for optimizing IT investments; outsourcing services with local, national and international capabilities; and staffing services to support human-capital management needs.

Computer Horizons, with annual sales greater than $245 million, is headquartered in Mountain Lakes, N.J. It focuses on offering IT services to vertical markets, including financial services, health care and the pharmaceutical industry. It also provides IT services to the federal government through its government arm, RGII Technologies.

The combined, new company will employ roughly 5,000 consultants working out of 50 offices in 28 states, plus offices in Canada, the United Kingdom and India. In addition, it will have a sizable government practice with annual sales of approximately $65 million. The company, to be called Computer Horizons, will be based in Minneapolis, offering a wide range of services, including application management and development, infrastructure support and data management.

Penny Quist, Analysts International senior vice president, tells VARBusiness that, in this era of consolidation, the deal was inevitable.

"If you look at this industry, there is a need for companies to be at a certain size to be prime for the client," she explains. "It was apparent to both companies that we needed to grow to offer our stakeholders that size. We both knew we needed to do something like this."

The deal--which comes on the heels of Analysts International's purchase of Redwood Solutions, a Livonia, Mich.-based services company focused on integrating hardware and software solutions for data storage and retrieval systems--was especially sweet for the two companies, both in the industry for more than 20 years, because of their distinctive client lists.

"We looked for companies that we could align well with, and we only have overlap with eight clients," Quist says. "That means we will be able to complement one another--to build complementary services we have into one another's client base. We won't be cannibalizing one another's business."

Quist adds that the companies will be examining employee redundancies. "We are looking at our back offices, as well as duplicate facilities and infrastructure," she says, adding that the company at present has no specific number of employees it plans to cut.

In a statement, Computer Horizons CEO and president William J. Murphy said that the merger would result in approximately $15 million in savings, a substantial portion of which relates to the costs of running a public company and the elimination of duplicate facilities and infrastructures.

"We will be enjoying a cost savings because only one company has to [be public] now," Quist says.

A tentative time line calls for the S-4 filing to be completed this month. "After that, it's [going] to the shareholders [for] their approval," Quist says. "We hope to get that done in the third quarter."

Murphy will lead the management of the new company as CEO, and Analysts International president Jeffery P. Baker will serve as president and COO. The board of directors will be composed of five directors from each merging firm.

Analysts International shareholders will receive 1.15 shares of Computer Horizons common stock for each share of Analysts International common stock. Current Computer Horizons shareholders will own approximately 52 percent of the combined company, and current Analysts International shareholders will own approximately 48 percent. *

The Computer Horizons-Analysts International deal is just one of many major VARBusiness 500 mergers that are changing the landscape of our industry. For a look at other important deals that have created new players to be reckoned with, check out our VARBusiness 500 issue--available June 13.

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