Edgewater to Sell ClinForce, Buy Back Shares

Edgewater Technology Inc. of Fayetteville announced on Dec. 15 that it had reached an agreement to sell ClinForce, the corporation’s clinical trials support division in Raleigh, N.C., for $31 million in cash to Cross Country TravCorps of Boca Raton, Fla.

The sale means Edgewater Technology Inc., formerly StaffMark Inc., has divested itself of five of its divisions since June and can now concentrate on its one remaining division, the Edgewater Technology e-solutions business in Wakefield, Mass.

“This was according to our plan,” said Clete Brewer, chairman and CEO of Edgewater Technology Inc. Brewer said the actual process of trimming the corporation down to one operating unit took about a year.

“It will all merge into one,” Brewer said of the combination of Edgewater Technology Inc. of Fayetteville and the Edgewater Technology division in Massachusetts. “It will be seamless to the naked eye, to the public.”

Also on Dec. 15, Edgewater Technology Inc. announced that it would use $130 million from the proceeds of the sale of the divisions to buy back stock from shareholders who wish to sell. Many shareholders were unhappy with the company’s sudden shift from a staffing agency to a technology business. The amount that will be paid per share has yet to be determined. The tender offer is expected to take place before the sale is completed in the second quarter of 2001. Edgewater Technology Inc. has $145 million in cash.

StaffMark purchased Edgewater Technology in March 1999 for about $44 million, Brewer said.

By the second quarter of 2001, after a vote of shareholders, Edgewater Technology Inc. will be out of Fayetteville, Brewer said.

Brewer will continue to live in Northwest Arkansas and serve on the Edgewater board. Edgewater will continue to operate offices in Rogers and Little Rock, with 30 to 40 employees in Arkansas. The company also has offices in Peabody, Mass.; Minneapolis; Birmingham, Ala.; and Charlotte, N.C.

The other divisions sold or spun off include the Robert Walters financial and accounting division in London, which was spun off, bringing in $199.2 million on the London Stock Exchange; the StaffMark commercial staffing division of Fayetteville, which was sold for $190.1 million to Stephens Inc. of Little Rock; Strategic Legal Resources, the legal-support division, which was sold to a company owned by a group of investors including MidMark Capital II LP and Edwardstone & Co. for $13.25 million; and IntelliMark, the information technology staffing and solutions division, which was sold to Charlesbank Capital Partners LLC for about $42.7 million.

For the nine months ended Sept. 30, ClinForce’s revenues increased 0.8 percent to $20.6 million, gross profits increased 12.4 percent to $6.2 million, and earnings before interest, taxes, depreciation and amortization (EBITDA) increased 6.5 percent to $2.8 million, compared with results for the nine months ended Sept. 30, 1999.

For the nine months ended Sept. 30, Edgewater Technology posted revenues of $23.4 million, an increase of 58 percent over the same period in 1999. Gross profits were $12.2 million, or 52.1 percent of revenues, compared with $8.3 million the previous year. EBITDA, excluding unallocated corporate overhead, was $4.4 million, or 18.8 percent of revenues, compared with $1 million in 1999.