Michael Page halts talks with Adecco after 'unattractive' offer

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Michael Page has pulled out of talks with Adecco after three months, rejecting its rival's attempt to take control with an offer that values the group at £1.3bn as "materially undervaluing the company".

The UK headhunter has called on the takeover watchdog to issue a "put up or shut up" order after its rival refused to raise its bid but insisted it hasn't given up hope of a deal.

Michael Page yesterday released an official statement saying it had rejected an indicative 400p-per- share takeover offer from Adecco, and then a subsequent proposal to take majority control. The statement added that, following more meetings between the senior managers, Michael Page "is ending discussions with Adecco". Despite the two sides conducting talks since May, they are understood to be no nearer to meeting each other's valuation.

Michael Page, which is listed on the FTSE 250, had set an informal deadline of Monday for Adecco to increase its bid when it comes out with its half-year results. Adecco has so far refused to increase its offer and Michael Page rejected its overtures on Wednesday.

The Swiss group said yesterday that it was still considering an offer, but reiterated its desire for a friendly merger.

Michael Page has since sought talks with the Takeover Panel to agree a formal timetable for Adecco to announce a firm intention to bid or pull out.

The Swiss group said yesterday it "believes that there is scope for a combination with Michael Page, which is to the benefit of both companies and their respective shareholders".

Julian Cater, analyst at Collins Stewart, believes Adecco's attempts to land the group at these levels will founder. He said: "We think that unless it returns with an offer for the entire company in cash at 450p or more it will not get Michael Page back to the negotiating table, and a deal is unlikely below 500p."

The worsening economic conditions have hit the UK recruitment firms hard, with Michael Page worth more than 600p a year ago. As companies struggle to maintain profits, many have turned to cutting headcount to lower costs, and some, such as the investment bank Merrill Lynch yesterday, have imposed global hiring freezes.

Michael Page revealed earlier this month that Adecco had made an unsolicited takeover approach valuing the group at £1.3bn. The news sent the shares soaring nearly a third to 369.75p, despite the UK group rebuffing the approach.

Adecco, the largest staffing company in the world, came back to the table earlier this week with a revised proposal. It offered to take a 50.1 per cent stake through a new share issue at a price "consistent" with 400p per share.

Under the plan, Michael Page, which would remain listed on the London Stock Exchange with Adecco as the majority shareholder, would return 200p per share to shareholders to compensate for the dilution.

Michael Page said the move was "unattractive for shareholders" and added: "After careful consideration and discussion with its advisers, the board of Michael Page unanimously concluded that this proposal materially undervalued the company and its prospects".

Panmure Gordon analysts said the speculation would now be on whether Adecco turns its attention to the smaller companies Hays or Robert Walters.