Swiss rival Adecco makes bid for Michael Page

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The Independent Online

Shares in Michael Page soared by nearly a third after the recruitment group confirmed an unsolicited approach from Adecco, the global industry leader.

In compliance with the Takeover Code, the UK company confirmed that it is in talks with its larger rival, as first revealed in The Independent. But it did not give the proposal a ringing endorsement, and analysts suggest the management will hold out for considerably more than the 350p to 375p being touted by market sources.

"The board continues to believe that the company has a very strong future as an independent group," Michael Page said in a statement. "The clear strategy of organically diversifying the group's activities and increasing exposure to growth markets, together with the longer-term structural growth drivers, mean that the company has excellent prospects."

The credit crunch and related financial downturn has taken its toll on the recruitment sector. Shares have plummeted as contractions in the housing market turn into redundancies among related industries such as construction and banking. Both Michael Page and Hays, another large UK recruitment company, have lost more than 50 per cent of their market capitalisation in the past 12 months.

But despite the board's guarded response, news of the Adecco approach sent the market soaring: Michael Page shares closed up 32.7 per cent at 352p, their highest price since November, and Hays closed up more than 10 per cent at 90p.

Both Michael Page and Adecco were keen to emphasise that the talks may not result in a firm offer. Analysts also question both the price and the fit between the two groups. Michael Page focuses on professional recruitment, rather than the lower-level jobs that are Adecco's main market.

"Adecco may believe that it had a once-in-a-cycle opportunity to acquire Michael Page. Whilst a bid premium of up to 42 per cent may be attractive to some, other investors may be unwilling to sell out at a depressed valuation when the shares were trading at 600p a year ago," analysts at Cazenove said.

Jonathan Jackson, an analyst at Killik Capital, said: "The management of Michael Page are strongly independent and are unlikely to recommend a sale unless the offer is over 400p."

Michael Page was set up in 1976 to specialise in financial services sector recruitment. It was floated in 1988 and now has more than 5,000 staff operating out of 166 offices in 28 countries. Adecco, with its headquarters in Glattbrugg in Switzerland, is one of the industry leaders, alongside US rival Manpower. Adecco has 7,000 offices in more than 60 countries.

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