SKILLED Spurns Merger Proposal from Programmed Maintenance Services
Australia's SKILLED Group, a provider of labor hire and workforce services, announced Thursday it has rejected the merger proposal from Programmed Maintenance Services that was received Dec. 17, 2014.
The Board of SKILLED Group, together with its advisors, reviewed Programmed’s proposal having regard to the extent of the industrial logic of combining the two businesses, taking into account the changes to SKILLED’s business profile over the last two years, the synergy (and dis-synergy) potential, and the terms of Programmed’s proposal.
The SKILLED Board has concluded that:
- The industrial logic of combining the businesses is not compelling given SKILLED’s existing strong market positions and stand-alone growth opportunities
- While a merger would create a larger presence in some industry sectors and provide some diversification, it is not clear that a merged business would be better strategically positioned than SKILLED is at present
- SKILLED has expanded and strengthened its Engineering business through recent investments, to create a business with strong growth potential in segments where Programmed does not operate
- SKILLED has invested over recent years to build a strong position in Marine Services, with a proven track record and operational expertise. The addition of Programmed’s businesses would add scale, but not significantly enhance SKILLED’s business profile or potential in this area. In particular, Programmed’s marine business is primarily exposed to the offshore construction segment, while SKILLED has diversified exposure across the full oil & gas project life cycle; and
- SKILLED is already the market leader in blue-collar labor hire in Australia, recognised for the quality of its people and its excellent safety record and customer service. The addition of Programmed’s business would not significantly alter this position.
- The (net) financial synergies from a merger of SKILLED and Programmed are in the order of the $16.1 million (AUD 20 million) per year as stated by Programmed, and would take a number of years to achieve. However, the majority of these relate to the removal of duplicate corporate overheads, which does not better position the business for future growth. The remaining cost synergies would be longer-dated and harder to achieve. Further, the cash cost of realising the synergies would likely outweigh the benefits in the first year
- The terms of Programmed’s proposal undervalue SKILLED and its contribution to a merged group.
SKILLED Group Chairman, Vickki McFadden said, “The terms of Programmed’s proposal do not reflect the value of SKILLED shares and the contribution that SKILLED would make to a combined group.
“SKILLED has strong and diverse businesses in Workforce Services and Technical Professionals. In Engineering, SKILLED provides specialist operations and maintenance solutions with a good pipeline of growth opportunities. Marine Services covers the full project life cycle from exploration to construction, production and decommissioning. SKILLED’s ability to leverage its capability across the project life cycle positions the business to capitalize on a visible pipeline of more than $806.2 million (AUD 1 billion) of addressable offshore contract work in the medium-term.
“In the last two years SKILLED has made a number of acquisitions to strengthen and to diversify the Group. Additionally, SKILLED has invested in systems and process improvements. These investments have delivered $22.6 million (AUD 28 million) in cost savings in FY13 and FY14, are expected to deliver at least a further $12.1 million (AUD 15 million) in FY15, and will continue to benefit the Group.
“SKILLED has a bright future as a standalone business. The Board and management team are focused on executing our current strategy. With Angus McKay recently joining as CEO to lead SKILLED through its next stage of development, we will provide an update on our strategy to deliver value for SKILLED shareholders in due course.
12
View Full Article
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- ExxonMobil Racks Up Discoveries in Guyana Block Eyed by Chevron
- Oil Market Sentiment Has Improved Significantly
- EU, US Eye Collaboration on Nuclear Materials
- USA Driving Activity to Increase to All-Time Highs
- EU Electricity Export to Ukraine Up 94 Percent in Two Years
- China Coal Output Falls for First Time since Government Ordered More
- TC Energy to Sell Prince Rupert Gas Pipeline Project to First Nation
- BP Pulse Buys One of Europe's Largest Truck Stops
- UK CCUS Plans Outdated: Think Tank
- I Squared Eyes Full Ownership of Europe Gas Storage Firm
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- Rystad Looks at the Buzz Around White Hydrogen
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension