S&P: Manpower ratings unaffected by acquisition

Standard & Poor's said Friday that Manpower Inc.'s (BBB-/negative/--) agreement to acquire Right Management Consultants Inc. for about $614 million, comprised of $488 million in Manpower common stock and $126 million of Right Management debt, does not affect its ratings or outlook on Manpower.

Right Management is the market leader in the highly countercyclical outplacement industry, with operating margins significantly higher than those of Manpower.

S&P said the complementary acquisition provides a good strategic fit, improves business diversity, and provides potential cross-selling opportunities, though cost savings are not expected to be meaningful. However, Right Management's sales declined 13% in the third quarter ended Sept. 30, and EBITDA fell 14%, reflecting declining demand for outplacement services. Additionally, management has provided guidance of $450 million in sales for full-year 2003 for Right Management, which corresponds to an 18% revenue decline in the fourth quarter.

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