Large stockholders in Australian workforce provider Skilled Group and Programmed Maintenance Services have cautiously welcomed talk of a merger between the two rivals but have indicated the Programmed merger offer undervalues Skilled, The Australian said
Programmed chairman Bruce Brook announced on Monday that he had made a “non-binding merger of equals” proposal to Skilled on December 17, which could create a listed entity worth $700 million to $800 million, the report said.
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Skilled Group is a labor hire firm servicing the Australian energy and resources industries.
While both companies’ share prices rose on the news of Monday’s merger offer, Skilled was down 3.6 per cent yesterday at $1.47 and Programmed was flat at $2.58, the Australian said.
Under the proposal, Skilled and Programmed shareholders would each own 50 per cent of the merged group, with Skilled shareholders to receive 0.5032 Programmed shares. Skilled shareholders would be offered a cash payment of 25c per Skilled share, the report said.
Skilled has labelled the bid “opportunistically timed” and said it undervalued the company as it was “based on a closing share price for Skilled well below medium and longer-term volume-weighted average prices”.
Both companies have been hurt by the downturn in the oil price and commodities market generally.
Invesco Australia owns 6 per cent of Skilled shares and 8 per cent of Programmed. Cynthia Jenkins, Invesco’s head of Australian smaller companies, said the possibility of a merger between the two companies “had a lot of potential” and “made sense” but said the company needed to look into further details of the offer, the report said.
Jenkins said she was of the opinion that Skilled was undervalued. “I thought that the Skilled (share) price was too low. Yes, Skilled is getting hurt in the current cycle but in the longer term there is a lot of value, ” she said. “I think it is opportunistic and that’s why Programmed have moved when they did.”
It is understood that Thorney Investments, controlled by Melbourne billionaire Alex Waislitz, is unlikely to be a seller at the offer price, believing it undervalues Skilled. Thorney is a long-time supporter of Skilled and has a stake in the company of about 5 per cent. Waislitz was overseas and unavailable for comment yesterday, the report said.