USIS Announces Plan to Merge With HireRight

In another sign of consolidation in the background-checking field, US Investigations Services is snapping up HireRight in a deal worth about $195 million.

Falls Church, Virginia-based USIS on Monday, June 9, agreed to pay stockholders of Irvine, California-based HireRight $15.60 per share in cash, a 54 percent premium over HireRight’s closing share price of $10.12 on Friday, June 6.

“The addition of HireRight, with its highly respected leadership and team, industry-leading technology and culture of innovation, transforms our strategic efforts to build a pre-eminent global employment and drug screening business that is uniquely positioned to deliver enhanced products and customer value,” USIS chief executive Randy Dobbs said in a statement.

USIS has specialized in providing background investigations to the federal government. It also offers background screenings such as criminal history checks to private sector clients. HireRight’s focus has been online employment screening tools. HireRight also provides integrated screening through recruiting software from vendors including Oracle and Taleo.

USIS and HireRight billed the deal as a merger that will serve more than 27,000 customers of various sizes. It comes on the heels of plans for another major tie-up in the background checking arena. In February, publishing and information firm Reed Elsevier said it planned to acquire data broker ChoicePoint for $4.1 billion. That proposed acquisition has come under scrutiny by government officials. In April, ChoicePoint said it and Reed Elsevier received a request for additional information from the Federal Trade Commission regarding the proposed merger, and that the firms have been notified of parallel reviews by the attorneys general of certain states.

The economic slowdown and job-cutting of recent months has raised concerns about the health of the background checking business. HireRight’s shares, for example, dropped from more than $14 in early September to below $10 for much of 2008.

But a recent survey by consulting firm Rocket-Hire found growing use of online background investigations. The percentage of organizations using online background investigations rose from 31 percent in 2002 to 35 percent in 2007, according to the study.