Skilled Group Ltd (ASX: SKE) has entered into an agreement with Programmed Maintenance Services Ltd (ASX: PRG) for a complete takeover of Skilled shares, subject to shareholder and court approval. The takeover would create a super staffing, maintenance and facilities management business.
December last year Programmed approached Skilled with a scrip based takeover bid, proposing that every Skilled share would acquire 0.5032 Programmed shares plus 25cents cash per share. The initial offer was rejected by Skilled and has since been reassessed and increased by Programmed. Under the current offer, 100 percent of Skilled shares will be acquired by Programmed for the consideration of 0.55 Programmed shares plus 25cent cash per Skilled share. Skilled intends to take the cash component in the form of a fully franked dividend. Skilled shareholders are expected to own 52.4% of the combined entity, set to be worth approximately $700m, with the transaction planned for completion in mid-October 2015.
The companies predict that within the first 12 months the combined entity will create approximately $20m in pre-tax synergies and hopes to increase that to $35m within three years. The combination plans to create an increase in EPS for FY16 and FY17, increase economies of scale to lower operating costs and increase quality of service, increase diversification and lower earnings volatility, increase trading liquidity with increased market capitalisation and create more funding opportunities for the future.
Skilled Group and Programme Maintenance Services have both seen a down trend in their share price in the last couple years on the back of a slowing Western Australian economy. However since the takeover bid late last year, both companies have seen more positive trends. Programme and Skilled placed their shares in a trading halt yesterday. Skilled closed at 1.545 and Programmed at $2.80 and will commence trading tomorrow morning 25 June.
Author: Imran Valibhoy
Jun 24, 2015
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.