The Australian recruitment landscape may witness some interesting changes as merger talks between Programmed Maintenance Services and Skilled Group are reportedly going on and we may get to see some tangible development in this area in next few months.
Details about the merger have arrived. The merger was proposed by Programmed. If the merger indeed takes place, then it would save the two businesses $20 million a year. Besides, both companies will be enrolled in the ASX 200 list and earn a market capitalisation exceeding $500 million
According to sources, the tie-up will be worth $700 million. Both Skilled Group and Programmed will own 50% of the merged entity. As soon as the news related to the merger broke, stocks of each companies went high. The shares of Programmed saw an increase of 3% and stood at $2.46. The shares of Skilled Group saw a remarkable surge; its shares were up 14% at $1.455.
Bruce Brook, the chairman of Programmed said the merger will open doors for new innovations in the fields of facility management, staffing and recruitment. In his own words, “We have designed the proposal as a true merger of equals with a significant premium for Skilled shareholders so that each group of shareholders is able to share equally in more than $20 million per annum of anticipated synergy benefits.”
Skilled is being valued by Programmed as $1.38 for each share. Skilled currently has more than 264 million shares, and being valued by Programmed as $365 million. The offer however requires the current CEO of Skilled, Angus McKay to be replaced by Chris Sutherland, the CEO of Programmed. But this piece of information shouldn’t make Mr. McKay feel pissed because he would receive a hefty sum of $1.25 million upon accepting the terms of his employment under Programmed.
The response from Skilled regarding the merger offer has been lukewarm. The company said the offer is “Opportunistically Timed” because the valuation of Skilled has been done “based on a closing share price for Skilled well below medium and longer-term volume-weighted average prices.” Thus, the company was undervalued.
In a statement, Skilled said, “Any combinations of Skilled and Programmed would need to be pursued on terms which reflect appropriate value for Skilled shareholders.”
Hence, the talk is still on, only some minor skirmishes are blocking the way of the merger. Sources reported the retiring CEO of Skilled Mick McMahon and Chris Sutherland of Programmed are having talks regarding the merger, which means some positive news could very well be on the cards.