Blue Arrow, the employment agency that was at the centre of a City scandal and lengthy fraud trial in the late 1980s and early 1990s, has been sold for pounds 48m to a rival recruitment company.
Corporate Services Group, a fast-growing employment company whose shares are listed on the USM, will take control of Blue Arrow's 80 branches which specialise in temporary jobs. It is buying the company from its managemnt, which acquired the company from the US group Manpower in 1991.
Jeffrey Fowler, chief executive of Corporate Services, said he would retain the Blue Arrow name but use the group's database to convert clients to the concept of contract labour - where a company contracts out certain functions to an external agency.
Corporate Services has developed a profitable niche in this area and boasts a blue-chip client list which includes banks, electronics companies and government agencies. Mr Fowler estimates that the market is growing at around 35 per cent a year as the concept gains acceptance. "We've placed doctors from South Africa into British hospitals and taken UK engineers to Japan. And we're doing all this from places like London and Barking. People are starting to understand this concept and we've barely started yet."
The company is paying pounds 35m in cash for Blue Arrow, with the balance paid in shares. It is funding the deal though a placing and open offer of 45 million shares at 110p.
Corporate Services has grown rapidly in recent years. Last year it bought four companies for a total of pounds 15m. The group made profits of pounds 8.4m on sales of pounds 133m. The combined company will have sales in excess of pounds 300m.
The shares have risen from 13p three years ago to 126p, up another 4.5p yesterday. They have risen by more than 50 per cent this year alone.