Programmed Maintenance Services has proposed a merger with the Skilled Group which it says will save the two recruitment businesses $20 million a year.
The deal would also give the companies a leg up to to ASX 200 status and a market capitalisation of more than $500 million.
Programmed is valuing each Skilled share at $1.38. Skilled shareholders would get 0.5032 Programmed shares (representing $1.13 in value based on Programmed’s closing share price on the day prior to the proposal) plus 25 cents in cash.
Skilled Group and Programmed shareholders would end up each owning 50% of the merged group.
Programmed shares were up almost 3% to $2.46 but Skilled quickly went way beyond the offer price and was stronger by more than 14% at $1.455.
Bruce Brook, Chairman of Programmed, says the logic for the merger to create a market leading staffing, maintenance and facility management business is compelling.
“We have designed the proposal as a true merger of equals with a significant premium for Skilled shareholders so that each group of shareholders is able to share equally in more than $20 million per annum of anticipated synergy benefits.”
Skilled is reviewing the proposal but says the price is opportunistic and well below medium and longer term average prices.