On Assignment Inc., a Calabasas-based staffing agency, on March 20 announced plans to buy Apex Systems Inc. of Richmond, Va., in a deal valued at $600 million.

The combined firms will create one of largest professional staffing firms in the country and the second largest firm with a specialty in information technology. Apex has $700 million in revenue and has been growing at a compounded annual rate of 30.4 percent since 2000.

Under the terms of the deal, On Assignment will acquire all of Apex’s equity and retire all of its debt. The $600 million purchase price is comprised of $383 million in cash, and $217 million in newly-issued stock. On Assignment is financing the purchase with a $490 million term loan from Wells Fargo Bank, N.A., Bank of America Merrill Lynch and Deutsche Bank Trust Company Americas, and an additional $50 million revolving credit line.

The term loan is being used for the cash portion of the deal, to repay the existing debt of both companies and to pay the fees and expenses incurred in the transaction.

On a pro forma basis, the combined companies would have 2011 revenue of $1.3 billion. The deal is expected be accretive on both GAAP and cash EPS basis in 2012. The debt of the combined companies will total 3.75 times estimated pro forma earnings before interest taxes, depreciation and amortization for the 12 months ended March 31, 2012.

The transaction is expected to be accretive on both a pro forma GAAP and cash EPS basis in 2012 and beyond, excluding transaction-related costs.

On Assignment said it expects the deal to generate strong revenue growth and free cash, allowing the combined companies to repay the new debt.

The acquisition, which was years in the making and approved by the boards of directors of both companies, is subject to the approval of On Assignment shareholders, and requires regulatory approvals as well as other customary closing conditions. The transaction is expected to close in May 2012.

On Assignment said the acquisition positions the company to provide a broader spectrum of IT staffing services from mission critical daily IT services to high-end specialty projects.

“Apex Systems becoming part of On Assignment further positions us in the most attractive and fastest-growing segments of the staffing industry,” Peter T. Dameris, president and CEO of On Assignment said in a prepared statement. “Apex Systems’ IT staffing services are complementary to those offered by our existing technology division, Oxford Global Resources. Because the offerings do not compete, the acquisition will create value for our clients, shareholders and employees by expanding our presence in the IT staffing market.” The transaction also achieves On Assignment’s five-year strategic plan to reach $1 billion in annual revenue three years ahead of schedule, he said.

“This transaction did not take place overnight,” he added. “It is the result of years of discussions and analysis to ensure it came together in the right way, at the right time and was the right fit. As a result, integrating Apex Systems with On Assignment should be a seamless process and will permit our companies to remain focused on serving our clients and growing our business.”

Apex Systems will continue to operate as it has in the past and the company’s three co-founders will remain with the combined companies. They will join On Assignment’s board of directors. Rand Blazer and Ted Hanson, chief operating officer and chief financial officer, respectively, and the rest of the senior management team will remain in place and continue to oversee the day-to-day operations of the business.

Judy Temes