Randstad Holding NV has announced its intention to buy its smaller Dutch competitor Vedior NV for 3.5 billion euros (US$5.14 billion) to create the world's second-largest staffing company.
The offer values Vedior at 20.19 euros a share, the Diemen, Netherlands-based company said in an e-mailed statement yesterday, 64 percent more than its closing price last Thursday. Randstad is offering 9.50 euros a share in cash and 0.328 of a Randstad share for each share of the Amsterdam-based company.
Randstad is buying Vedior to get a larger portion of its sales from matching skilled workers to jobs. The companies are teaming up as revenue growth in some European markets slows and competition intensifies amid consolidation. The purchase will lead to 100 million euros in annual savings on tax and administration costs. Adecco SA, the world's biggest staffing agency, in June agreed to buy Tuja Group to expand in Germany.
"There may be a bidding contest," Thijs Berkelder, an analyst from Petercam in Amsterdam, said by telephone yesterday. "Others like Adecco and Manpower may generate more synergies than Randstad."
Berkelder has a "buy" rating on Randstad and recommends investors "hold" Vedior stock.
The companies do not expect a rival offer, Vedior chief executive Tex Gunning said on a conference call with journalists yesterday.
Randstad's purchase would create a company with annual sales of about 17.3 billion euros and earnings before interest, taxes and amortization of 833 million euros. Randstad expects the purchase to add to earnings immediately, chief executive Ben Noteboom said. There would not be any forced dismissals as a result of the purchase.
There is "no intention" to sell off Vedior assets, Noteboom said on the call. Randstad's offer consists of 1.7 billion euros in cash. The company plans to refinance all of Vedior's short and long-term debt and would also refinance its preference shares. Randstad plans to issue 57 million shares to finance the purchase.
Randstad overtook Vedior as the world's third-largest staffing company last year. Vedior was spun off from Royal Vendex KBB NV in 1997 and in 1999 bought Select Appointments for US$1.79 billion.
The two companies on Friday said they were in talks that could lead to a public offer. Vedior shares rose 31 percent before the announcement that day. The Dutch regulator is investigating the matter for possible insider trading.
Randstad said it is cooperating "fully" with the probe.
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