Shares of First Advantage took a hit recently following the announcement of their acquisition of competitor Sterling Check for $2.2 billion, including debt. The company also provided a cautious outlook for the current year, prompting a 10% drop in their stock price to $15.10 during morning trading. Despite this setback, Sterling Check saw a 25% rise in their stock price to $15.50.
Acquisition Details
First Advantage revealed that they will pay approximately $1.2 billion in cash and issue 27.15 million shares of common stock to acquire Sterling Check. Shareholders of Sterling will have the option to choose between $16.73 in cash or 0.979 shares of First Advantage common stock for each share they currently hold.
Support from Goldman Sachs
Notably, entities connected with or advised by Goldman Sachs – who own almost 53% of Sterling Check – have given their support for the deal.
Outlook for 2024
Despite the acquisition news, First Advantage shared their outlook for 2024 earnings and revenue, falling short of Wall Street analysts’ expectations. The company anticipates adjusted earnings of 88 to 98 cents per share for the year, below the expected $1.07 per share. In terms of revenue, First Advantage forecasts $750 million to $800 million for 2024, lower than the anticipated $818.7 million by analysts.
