JSE-listed recruitment company Adcorp has put a R622 million offer on the table to buy specialist ICT staffing solutions company Paracon, in a deal that will create a R6.5 billion firm.
Adcorp, which turned over R5.4 billion in the last financial year, specialises in staffing and recruitment across a range of sectors. It also provides training and manages employee benefits and wellness.
Paracon, which reported R1 billion in revenue in its last financial year, will fill Adcorp's gap in high-level specialised ICT skills and solutions, says a statement issued by Paracon.
Paracon shareholders can elect to either receive R1.97 for each share they own, or swap 13.8 shares for one Adcorp share.
Mark Jurgens, Paracon CEO, says the offer is a 12% premium to Paracon's average trading price in the 30 days before it issued its first cautionary in July 2011. Paracon's share moved up 2.63%, or 5c, to R1.95 just after the announcement this morning.
Jurgens says the deal is a 'win-win' for both companies' shareholders. “Paracon has no long-term gearing, is highly cash-generative, and remains in a sustainable cash-flush position which attests to the strength of our business model.”
customer base, notes Jurgens.
Adcorp CEO Richard Pike says buying Paracon will significantly strengthen its offerings. “Paracon is a well-run, quality, cash-generative business. As such, it is not our intention to tamper with what has been a successful formula but rather to further nurture and promote this winning culture within the business.”
Pike adds the deal will broaden its spectrum of staffing solutions, especially in the specialised niche area of ICT where it currently has a limited offering.
The deal, which is expected to be finalised by year-end, already has irrevocable approval from at least 50% of Paracon and Adcorp shareholders.
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