28th Jan 2015 09:13
LONDON (Alliance News) - Matchtech Group PLC Wednesday said it has agreed a recommended takeover of Networkers International PLC in a deal that values that company at GBP57.9 million, while Matchtech Chief Executive Adrian Gunn has decided that the deal marks a good opportunity to bring forward his retirement and has stepped down with immediate effect.
In a joint statement, Matchtech and Networkers said they've agreed a deal which will see Networkers shareholders get 34 pence in cash and 0.063256 new Matchtech shares for each Networkers share they own. That represents an indicative value of 67.4 pence per Networkers share, a 22.5% premium over Tuesday's closing price of 55.0 pence.
Shares in Networkers are trading up 13.7% at 62.55 pence Wednesday morning, shares in Matchtech are down 2.9% at 512.00 pence.
Matchtech said it expects the deal to boost its earnings in the first full financial year after it completes. It said it will accelerate its aim of becoming the "market leading" specialist recruiter in engineering and technology in the UK and internationally.
"We continue to see major opportunities in our core markets of white collar engineering and technology recruitment. Both digitization and converging technology is creating further opportunities in these areas and the addition of telecoms recruitment to our portfolio creates an even stronger specialist group," Matchtech's new CEO Brian Wilkinson said in a statement.
"In addition, Networkers' long-standing, substantial and profitable overseas operations will enable us to accelerate the introduction of our Engineering services to our international customers with a considerably reduced cost, risk and time profile," he added.
Wilkinson has taken over the CEO role after giving up his role of executive chairman. Non-Executive Director Ric Piper is to be interim non-executive chairman until the board identifies a permanent replacement.
Gunn had planned to retire in 2016, but said the takeover deal meant it was an appropriate time to bring forward his retirement. He's been with Matchtech for 26 years, and its CEO for eight years.
Matchtech said it will form a new management board once the takeover is completed, with the combined group led by Wilkinson and including Tony Dyer as group chief financial officer and Keith Lewis as chief operating officer of the existing Matchtech businesses. The team will also include current Networkers CEO Spencer Manuel, and Networkers CFO Jon Plassard.
Roger Goodman, currently non-executive chairman of Networkers, will join the Matchtech Board as a non-executive director.
In a separate trading statement, Matchtech said it expects its full-year results to be in line with its own expectations, as it was continuing to experience strong demand for skilled engineers in both the UK and abroad. It said net fee income rose 2% to GBP22.5 million in the six months to January 31, the first half of its financial year.
Net fee income rose 6% in its engineering business, more than offsetting a 5% decline in its smaller professional services business. Contract net fee income accounted for 72% of the total, and permanent fees for 28%, the same as last year.
Also separately, Networkers said its trading activity in the second half of 2014 was "much improved" compared to the first half, helped by improved market conditions in its telecoms division and continued growth in its energy and engineering divisions.
The company expects its full-year net fee income and underlying performance to be in line with its expectations.
However, it noted that due to the increase in trading activities in its second half, its working capital requirements have increased by around GBP2.5 million during 2014.
At its interim results last September, Networkers posted a fall in pretax profit to GBP2.8 million from GBP3.3 million a year before as a rise in revenue was offset by higher cost of sales, and the strength of sterling. The company derives 68% of its net fee income from overseas markets.
Networkers said Wednesday it expects an exceptional cost of GBP200,000 in its results in relation to a US litigation settlement, and a GBP250,000 charge related to the restructuring and integration of business units.
By Steve McGrath; [email protected]; @stevemcgrath1
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