7th Mar 2005 07:02
Multi Group PLC07 March 2005 Multi Group Plc ("Multi" or "Company") Acquisition of Berry Recruitment Holdings Limited Multi Group Plc is pleased to announce: • Acquisition of Berry Recruitment Holdings Limited ("the Acquisition"), a company which operates a staffing and recruitment business providing both general staff and specialist personnel to the medical sector; • Subscription for 3,650,000 ordinary shares by Directors of Multi; • Admission document and a notice of Extraordinary General Meeting is today being sent to shareholders Oliver Cooke, Multi's Executive Chairman said, "This acquisition is significant as it marks the relaunch of the Group. We believe that market conditions are now beginning to favour the recruitmentsector and intend to use the Company as a vehicle to consolidate existingoperators within the industry. The acquisition of Berry is an essential step in this strategy. It gives usaccess to experienced operators and provides us with a meaningful base fromwhich to develop. I am also pleased that we are in a position to addsignificant value to Berry's operations. Following the transaction the Group will still have more than £4 million of cashand we look forward to the future with confidence." For further information please contact: Oliver Cooke Multi Group Plc 08701 602901Executive Chairman William Vandyk Corporate Synergy Plc 020 7626 2244 Multi Group Plc ("Multi" or "Company") Acquisition of Berry Recruitment Holdings Limited("the Acquisition") Multi is pleased to announce that it has today conditionally agreed to acquirethe entire issued share capital of Berry Recruitment Holdings Limited ("Berry"),which operates a staffing and recruitment business providing both general staffand specialist personnel to the medical sector. Berry is to be acquired for an initial consideration of £525,000, which is to besatisfied by the issue to Southwind Limited and Antony Berry ("the Vendors") of15,000,000 ordinary shares of 0.1 pence each in the Company ("Ordinary Shares")at an issue price of 3.5 pence per share (the "Issue Price"). In additionpotentially some 50,000,000 Ordinary Shares may be issued to the Vendors subjectto the achievement by Berry of certain agreed financial performance targets ineach of the years ended 31 December 2005, 2006 and 2007 as described in moredetail below. As a part of the Acquisition £676,577 of Berry's existing long term debt will berepaid by Multi in cash at completion. The balance, amounting in aggregate to£1,070,829, will be converted into Ordinary Shares at the Issue Price. Under the AIM Rules this transaction is deemed to be a reverse take-over and asa consequence requires the approval of shareholders in general meeting. To thisend notice of an EGM to be held at 11:00am on Wednesday 30 March 2005 at theoffices of Kirkpatrick & Lockhart Nicholson Graham LLP at 110 Cannon Street,London EC4N 6AR has today been sent to shareholders. Background to the Acquisition In August 2004, the Company completed the disposal of its previous businesseswith the sale of its tool-hire division for a cash consideration of £7 million. At that time the Directors investigated other business sectors in which theGroup might more successfully operate and identified the staffing andrecruitment sector as being one in which, in their opinion, there aresignificant opportunities to develop the Group. The Board's objective is now to develop a strong and profitable group offeringthree principal services: - the identification, validation and introduction of permanent staff; - the provision of well qualified temporary staff and longer term contractors;and - the provision of selective outsourcing services. These services will be focused on a series of niches that are as far as possiblenon-cyclical in nature, or alternatively where there is strong established andgrowing demand for the services being offered. Such niches would include themedical, education and law enforcement markets. To achieve this objective the Directors intend to pursue a buy and buildprogramme, using Multi as a vehicle to consolidate both public and privatesector operators within the staffing and recruitment industry. The acquisition of Berry is seen as the first step in this strategy. Background on Berry Berry was founded in 1997 by Antony Berry, the former chairman of Blue Arrow,which grew to become one of the world's largest recruitment groups. Berrycurrently has two divisions, one supplying staff into a wide range of commercialsectors and the other providing predominantly unskilled and semi-skilledpersonnel to the medical and care sectors. The Berry Group currently has over 50 employees and operates from 10 leaseholdoffices (Beckenham (2), Birmingham, Colchester, Hatfield, Hull, Leeds,Newcastle, Oxford and Shrewsbury), five of which were opened in the second halfof 2004. Berry is still at a relatively early stage in its development and untilrecently, had experienced poor trading. The Directors believe that in largemeasure this was due to the absence of adequate funding. However, within the general recruitment division, Berry has recently enteredinto a number of significant new trading arrangements, which it is expected willlead to improved trading performance in the future. In addition, annualisedturnover within the medical division has grown significantly over the last year.Berry's unaudited management accounts indicate that from October 2004 it hasbeen trading profitably. The Directors believe that the Acquisition offers the following advantages: • Berry largely, but not exclusively, operates in one of the predominantly non-cyclical niches identified above; • whilst a proportion of the Vendors loans are being repaid in cash on completion, the initial and deferred consideration for the Acquisition is to be satisfied entirely through the issue of Multi shares rather than cash, which preserves the Company's cash resources for future development and acquisitions; • value will be added to the business as a result of the repayment or conversion into equity of Berry's long term debt; • there are identified cost savings to be made from the streamlining of the back office systems; and • Multi will secure access to experienced operators in the chosen sector. The Acquisition will also provide Multi with a meaningful base from which todevelop the Group. The Acquisition Agreement Under the terms of the Acquisition agreement, the Company has conditionallyagreed to acquire the entire issued share capital of Berry from the Vendors. Inaddition, the Company is repaying a proportion of the Vendors loans in cash withthe balance being capitalised as described in more detail below. The consideration for the Acquisition is to be satisfied as follows: • an initial consideration of £525,000 to be satisfied by the issue ofthe 15,000,000 Ordinary Shares of 0.1 pence in the Company; • an initial deferred consideration - if the profits before taxation ofBerry ("Berry Profits") for the year ended 31 December 2005 are between £250,000and £600,000 the Company will issue 10,000,000 Ordinary Shares to the Vendorsplus a further 57 Ordinary Shares for each £1 by which the Berry Profits exceed£250,000. Should the Berry Profits for the period exceed £600,000 a further 120Ordinary Shares will be issued to the Vendors for each £1 by which the BerryProfits exceed £600,000. No initial deferred consideration will be paid in theevent that the Berry Profits are less than £250,000; • a 2006 deferred consideration - if the Berry Profits for the yearended 31 December 2006 are between £600,000 and £750,000, the Company will issueto the Vendors 33.33 Ordinary Shares for each £1 by which the Berry Profitsexceed £600,000 subject to a maximum of 5,000,000 Ordinary Shares. In the eventthat the Berry Profits equal or exceed £750,000 an additional 5,000,000 OrdinaryShares will be issued to the Vendors. No deferred consideration in relation tothis period will be paid in the event that the Berry Profits are less than£600,000; and • a 2007 deferred consideration - if the Berry Profits for the yearended 31 December 2007 are between £750,000 and £900,000 the Company will issueto the Vendors 33.33 Ordinary Shares for each £1 by which the Berry Profitsexceed £750,000 subject to a maximum of 5,000,000 Ordinary Shares. In the eventthat the Berry Profits equal or exceed £900,000 an additional 5,000,000 OrdinaryShares will be issued to the Vendors. No deferred consideration in relation tothis period will be paid in the event that the Berry Profits are less than£750,000 Repayment of Vendor Loans As part of the Acquisition, the Company has agreed to have novated to it£1,144,152 of indebtedness owed by Berry to Southwind and £603,254 ofindebtedness owed by Berry to Antony Berry pursuant to the Vendor Loans. Immediately following such novation: • £276,577 of the Southwind Loans will be repaid in cash and thebalance, £867,575 by the issue of 24,787,857 Ordinary Shares; and • £400,000 of the Antony Berry Loans will be repaid in cash and thebalance £203,254 by the issue of £5,807,257 Ordinary Shares. Related Party Transaction Multi's largest shareholder, Southwind Limited, is interested in 50.87 per cent.of the Company's issued ordinary share capital. Southwind is also interested in40 per cent. of the issued share capital of Berry and, at completion, Berry willbe indebted to Southwind in the sum of £1,144,152. Under the terms of the Acquisition Agreement Southwind will be issued 6,000,000initial consideration shares. In addition, Southwind may receive deferred consideration satisfied by the issueof Ordinary Shares at the Issue Price if Berry meets certain financial targetsin the years ending 31 December 2005, 2006 and 2007. As part of the Acquisition it is proposed that part of the loans from Southwindwill be repaid in cash and the balance will be capitalised as described above. Therefore, at Admission Southwind will be interested in 165,787,857 OrdinaryShares representing 52.65 per cent. of the Enlarged Share Capital. Given the nature and extent of Southwind's shareholding in the Company, theAcquisition and the Southwind loan capitalisation are considered, for thepurpose of the AIM Rules, together to be a transaction with a related party. The directors of Multi, having been so advised by Corporate Synergy, considerthat the terms of the Acquisition and Southwind loan capitalisation are fair andreasonable insofar as shareholders of the Company are concerned. Directors Subscription The directors believe that the Acquisition presents an excellent opportunity toimprove the Company's trading performance and to add value for shareholders. Inthe light of this belief and their confidence in the prospects of the Company,Oliver Cooke and Andrew Brundle, the two executive directors of the Companyintend to subscribe for an aggregate of 3,650,000 Ordinary Shares at the IssuePrice following this announcement. Oliver Cooke intends to subscribe for 3,000,000 Ordinary Shares and AndrewBrundle intends to subscribe for 650,000 Ordinary Shares. Irrevocable Undertakings The Company has received irrevocable undertakings from Southwind, Oliver Cookeand Andrew Brundle to vote in favour the Resolutions in respect of theiraggregate holding at the date of this announcement of 142,586,649 OrdinaryShares, representing 53.72 per cent. of the current issued ordinary sharecapital of the Company. Copies of the Admission document are today being send to shareholders and willbe available for collection, free of charge, from Corporate Synergy Plc, 12Nicholas Lane, London EC4N 7BN until 14 April 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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