Shares of Skilled Group (ASX:SKE), Australia’s largest workforce provider, have jumped sharply after merger talks have resumed with rival Programmed Maintenance Services (ASX:PRG). In January, Skilled rejected a merger deal proposed by Programmed saying it did not want to risk the company’s market position. At the time, Programmed offered a merger of equals, offering 0.5032 of its shares in addition to 25c for every Skilled share. The deal valued the company at $325.5m. The board members of Skilled noted that their strong market position reflected a valuation significantly higher than what was offered.
At the time of the previous merger talks, Skilled said it was willing to hear other offers in the future. Both companies have announced that they have returned to the table for further merger talks on Monday. Bell Direct equities analysts Julia Lee said it was likely that Programmed made a higher offer for the company. “Expectations are that a takeover offer would have to be around that $1.60 mark to be successful and that’s why we’re seeing Skilled shares soaring today,” she said in an interview with Sky Business.
Skilled said it was undergoing a complete strategic review of its business in light of the merger proposition. It will evaluate its potential as both a standalone company and as a partner in a merger. Shares of SKE have received a boost following the resumed merger talk announcement. SKE has advanced 16.2c, or 13.17 per cent, at $1.39 per share around 3:12pm on Monday. SKE has fallen 50.46 per cent in the last 12 months and 6.58 per cent so far this year. PRG has fallen 9c, or 3.44 per cent, at $2.53 per cent. PRG has fallen 8.66 per cent in the last 12 months and 1.56 per cent so far this year.
Author: Matthew Dibb
May 25, 2015
Matthew has an extensive track record in equity markets and derivative advisory. Spanning a career in several investment banks and prviate wealth groups including Macquarie Bank, his specialist knowledge relates to capital market advisory and equity market analytics. Matthew has a diploma in Financial Advisory, Applied Finance and is ADA 1 & 2 accredited.