15th May 2014 12:24
LONDON (Alliance News) - Recruitment company Staffline Group PLC saw its shares rise Thursday after it said it had acquired Avanta Enterprise Ltd, a big provider of the government's Welfare to Work programme and skills training services across the UK, in a deal worth GBP65.5 million.
It said the deal would make it one of the three biggest providers of the Welfare to Work programme by referral numbers and boost its earnings. The scheme is a multi-billion pound programme to help the long-term unemployed into work, and Staffline had targeted expansion in this area as one of its long-term growth initiatives in a five-year growth plan it launched in 2012.
The company said it it had also raised GBP16 million by placing 2 million new shares at GBP8.00 each to help fund the deal.
In a statement, Staffline said it will pay GBP45 million for Avanta, including an initial cash payment of GBP25 million and then a deferred payment of GBP20 million that isn't contingent on anything. The remainder of the deal is made up of GBP18 million of cash in Avanta in the form of retained earnings, the repayment of GBP2.45 million in debt by two of the sellers.
"Avanta is one of the UK's leading Welfare to Work and training providers led by a management team with over 30 years' experience, employing approximately 600 staff and operating through 43 sites," Staffline said in a statement.
"Avanta is a profitable, cash generative business delivering (unaudited) revenues of GBP70 million and the acquisition is expected to be significantly earnings enhancing from day one," it added.
In a separate trading update to the company's annual general meeting, Chief Executive Andy Hogarth said Staffline had traded well since February with strong demand from new and existing customers, and the company is confident it will meet market expectations for 2014.
Staffline shares were up 15.3% at 890 pence Thursday, one of the biggest gains on AIM.
By Steve McGrath; [email protected]; @SteveMcGrath1
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