LONDON/ZURICH (Reuters) - World No.1 staffing agency Adecco (ADEN.VX: Quote, Profile, Research) will keep pursuing British recruitment company Michael Page (MPI.L: Quote, Profile, Research), which rejected on Friday for a second time an offer valuing the firm at 1.3 billion pounds.
"Adecco believes that there is scope for a combination with Michael Page which is to the benefit of both companies and their respective shareholders," Adecco said in a statement.
Michael Page, which specialises in the professional staffing market, said it had rejected as too low an initial offer of 400 pence per share, or about 1.3 billion pounds, for the whole group that Adecco made in June.
Adecco revised the offer on Tuesday to propose buying at least 50.1 percent of the British group at a price that would be "consistent" with 400 pence per share, Michael Page said, but added it had also rebuffed this approach.
"The board ... unanimously concluded that this revised proposal also materially undervalued the company and its prospects and that the proposed transaction structure was unattractive for shareholders," it said.
By 11.26 a.m., shares in Michael Page, which hit a nine-month high of 369.75 pence last week when news broke of the Adecco approach, had tumbled 6.3 percent to 314 pence, while Adecco shares were up 0.3 percent at 50.80 francs.
"Adecco can raise the bid, but I am not sure if they will as they have offered the same price twice now. Adecco may start to approach other takeover targets in the professional staffing business," said Helvea analyst Chris Burger.
"These are likely to be smaller than Michael Page. There are several unlisted companies that it could target."
DOWN BUT NOT OUT
Adecco, which said this week it wanted a friendly takeover of the British group, said it was still considering an offer.
"Adecco places considerable value on the management and strong culture of Michael Page. It is therefore important to Adecco that it is able to retain the senior management of Michael Page in the event that an offer is completed," it said.
Buying Michael Page would boost Adecco's presence in higher-margin professional and permanent staffing, and extend its geographic reach.
But analysts have said the buy, which would be Adecco's largest takeover, would be a risky move at a time of uncertainty about the depth and duration of a slowdown in many of the world's major economies.
"Looks unlikely to me that the deal will get done, certainly short term. It appears that the valuation gap is a bit too wide at the moment," one London-based trader said.
"Adecco have been talking about financial discipline which would appear to put a cap on their bid and Michael Page says that level undervalues the company," he said.
Earlier this week, Adecco reported a 5 percent drop in second-quarter net profit to 212 million euros, although this beat an average of analyst forecasts and it said its margins were holding up even as it predicted continued weak markets.
Adecco, which last year bought Germany's Tuja for 600 million euros (475 million pounds), has said it can leverage its balance sheet to 1 billion euros and has 400 million in shares available for acquisitions.
The Swiss company's bid comes a few months after Dutch staffing group Randstad (RAND.AS: Quote, Profile, Research) bought Vedior in a 3.2 billion euro deal, creating the world's second-largest jobs company after Adecco.
Adecco trades at 9.3 times 2009 earnings, in line with American rival Manpower (MAN.N: Quote, Profile, Research), but at a premium to Randstad, which trades at 7.3 times, according to Reuters data.
(Editing by Louise Ireland/Simon Jessop)
"Adecco believes that there is scope for a combination with Michael Page which is to the benefit of both companies and their respective shareholders," Adecco said in a statement.
Michael Page, which specialises in the professional staffing market, said it had rejected as too low an initial offer of 400 pence per share, or about 1.3 billion pounds, for the whole group that Adecco made in June.
Adecco revised the offer on Tuesday to propose buying at least 50.1 percent of the British group at a price that would be "consistent" with 400 pence per share, Michael Page said, but added it had also rebuffed this approach.
"The board ... unanimously concluded that this revised proposal also materially undervalued the company and its prospects and that the proposed transaction structure was unattractive for shareholders," it said.
By 11.26 a.m., shares in Michael Page, which hit a nine-month high of 369.75 pence last week when news broke of the Adecco approach, had tumbled 6.3 percent to 314 pence, while Adecco shares were up 0.3 percent at 50.80 francs.
"Adecco can raise the bid, but I am not sure if they will as they have offered the same price twice now. Adecco may start to approach other takeover targets in the professional staffing business," said Helvea analyst Chris Burger.
"These are likely to be smaller than Michael Page. There are several unlisted companies that it could target."
DOWN BUT NOT OUT
Adecco, which said this week it wanted a friendly takeover of the British group, said it was still considering an offer.
"Adecco places considerable value on the management and strong culture of Michael Page. It is therefore important to Adecco that it is able to retain the senior management of Michael Page in the event that an offer is completed," it said.
Buying Michael Page would boost Adecco's presence in higher-margin professional and permanent staffing, and extend its geographic reach.
But analysts have said the buy, which would be Adecco's largest takeover, would be a risky move at a time of uncertainty about the depth and duration of a slowdown in many of the world's major economies.
"Looks unlikely to me that the deal will get done, certainly short term. It appears that the valuation gap is a bit too wide at the moment," one London-based trader said.
"Adecco have been talking about financial discipline which would appear to put a cap on their bid and Michael Page says that level undervalues the company," he said.
Earlier this week, Adecco reported a 5 percent drop in second-quarter net profit to 212 million euros, although this beat an average of analyst forecasts and it said its margins were holding up even as it predicted continued weak markets.
Adecco, which last year bought Germany's Tuja for 600 million euros (475 million pounds), has said it can leverage its balance sheet to 1 billion euros and has 400 million in shares available for acquisitions.
The Swiss company's bid comes a few months after Dutch staffing group Randstad (RAND.AS: Quote, Profile, Research) bought Vedior in a 3.2 billion euro deal, creating the world's second-largest jobs company after Adecco.
Adecco trades at 9.3 times 2009 earnings, in line with American rival Manpower (MAN.N: Quote, Profile, Research), but at a premium to Randstad, which trades at 7.3 times, according to Reuters data.
(Editing by Louise Ireland/Simon Jessop)
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