Adecco to form IT staffing giant with pounds 167m buy
Friday 05 February 1999
The offer, which includes a final dividend of 15p, values Delphi at 565p a share in cash, more than double its low point at the end of last year but still well below the shares' all-time high of 905p in 1997. By the close yesterday, Adecco said it owned or had irrevocable undertakings for 29.9 per cent of Delphi shares, which ended up 57.5p at 550p.
The deal is a big step forward in Adecco's ambition to become the world leader in the fast- growing IT recruitment industry. "The industry is consolidating and we have been a major consolidator," said John Bowmer, Adecco's chief executive.
Adecco is one of the largest staffing companies in the world, with revenues of pounds 6.6bn and operating profits of pounds 279m last year. Its UK operations include Jonathan Wren, the banking and insurance recruitment specialist.
Despite its recent woes - when mis-management destroyed its credibility with investors - Delphi is still the largest IT recruitment agency in the UK, with sales of pounds 277m in the year to December 1997.
IT recruitment companies have taken a beating in the City recently as investors have become concerned about a slowdown in demand for contractors as the preparations for the millennium are completed.
However, John Bowmer, Adecco's chief executive, rejected suggestions that the company's move into IT recruitment was poorly timed. "We are in the midst of a technological revolution similar to the industrial revolution," he said. "The technology is here to stay."
Mr Bowmer said consolidation was being prompted by large companies which were attempting to reduce their suppliers. "Big firms want to have a similar service around the world. We can offer them a one-stop-shop," he said.
Tony Reeves, Delphi's chief executive, will be in charge of Adecco's IT staffing operations in Europe and will lead its strategy in IT recruitment. He stressed that none of Delphi's staff would lose their jobs as a result of the deal.
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