The acquisition “seems strategically motivated by balancing [Icon’s] strong staffing presence in Europe with an equally robust presence in North America,” Tim Evans, senior analyst with Wells Fargo, said in a note to investors.
Owning a staffing business may give Icon “an edge in resource planning--a factor currently under scrutiny as [Parexel] struggles with the use of contractors,” Evans added, noting that this is more of a potential benefit than an immediate benefit.
The acquisition of the division announced Monday will allow Icon to integrate Cross Country’s resourcing providers ClinForce and Assent Consulting, which will be combined with its functional service provider (FSP) services. The acquisition will also allow Icon to integrate with AKOS, a provider of pharmacovigilance and drug safety services.
“The ClinForce and Assent businesses will significantly expand our resourcing and FSP capabilities in the US and, when combined with DOCS strong European footprint and growing emerging markets presence, gives us the ability to deliver truly global resourcing solutions,” Ciaran Murray, CEO of Icon, said.
The Ireland-based contract research organization’s expected acquisition seems generally positive from both a strategic fit and a financial perspective, Evans also said. Cross Country could earn up to $3.75m in additional performance-based milestones through the acquisition, which is expected to close within 30 days.
FSP Capabilities
The forthcoming acquisition comes as Icon previously announced efforts to focus on FSP. In November, Icon announced its new FSP-focused strategy, which will allow the use of its oversight, training and resource systems by its DOCS staffing division.
The shift comes as Icon in December announced 2013 guidance that was on the lower end of consensus predictions for the year. The recovery of its central lab service and a strategic relationship with Pfizer are likely to be the year’s key drivers.