Whilst deal volumes are down on last month, optimism returns with the long awaited acquisition by Charterhouse Capital of Wood Mckenzie, the energy research consultancy, this year’s largest European private equity sale bringing hope that buyout activity will pick up in the second half of the year.
M&A activity also looks set to be on the up with major players across the sector confirming their plans to make acquisitions. May Gurney, the listed UK infrastructure services business announced plans to identify “fresh” acquisition targets in the water and waste utilities market; Mears Group confirmed its plans to seek bolt-on opportunities in social housing and domiciliary care and Managed Support Services, the UK-listed support services group also confirmed its plans to spend up to £100m on a transformational deal to diversify the business away from its mainstream building maintenance operations.
One sector that has received lots of press attention in the last month is Recruitment. As the carnage in the jobs market continues and unemployment levels rise, recruiters continue to report extremely tough conditions with four of the major UK recruitment companies, Michael Page, Hays, Robert Walters and SThree all announcing falling revenues. Depressed share prices have also sparked MBO discussions with management at listed firms, OPD Group and FDM Group, both launching takeover bids. In contrast however, Staffline, the industrial recruiter announced its plans to acquire smaller firms on the back of an improved financial performance NES, the Graphite backed recruitment specialist expressed an interest in overseas opportunities and Hamilton Bradshaw, the specialist recruitment investment firm also showed its commitment to the sector by backing Trish Stratford and the acquisition of housing and social care recruiter, QSG. For smaller firms however, mergers appear to be the new trend as was seen with Derby based IT and engineering recruiter, Syntax and its recent merger with The UK Career Consultancy. So with trading looking increasingly difficult for many, a consolidation phase looks inevitable.
Whitehead Mann one of the UK’s best known head hunting firms has been acquired by US recruitment and talent management company, Korn Ferry for an undisclosed sum. Whitehead Mann’s client list includes 90 of Europe’s top 200 companies. In 2006, Whitehead Mann was taken private for £26m by its senior staff. The deal was funded by investor Palladian, which is majority owned by Och-Ziff. According to reports, Whitehead Mann has not recorded a profit since being taken private in September 2006.
Hanover Search & Selection acquires City-based search firm Napier Scott for an undisclosed sum. Both companies are UK-based providers of recruitment services to the financial services industry.
Penna acquires recruitment communications company, Barkers from BNB Recruitment in a £8.6m deal. BNB had recently been following a policy of disposing of its non-core businesses, such as Hamlin Knight in January 2008 and Norman Broadbent in November 2008.
Wider Support Services deals
Capita Group acquires European loan services businesses of Capmark. Capmark provides administration services for loans, asset management and commercial mortgages in the UK, Ireland and Germany. The acquired businesses include Capmark Services Ireland, Capmark Services UK and Capmark Asset Management. It generated an operating profit of £3.8 million from revenues of £11 million in 2008. Capmark fits with Capita’s existing investment trust administration operations, which are already based in Ireland.
Capita acquires Carillion IT Services (“CITS”) for a consideration of £36 million. CITS is the external facing IT services business of Carillion plc. The business was acquired by Carillion in February 2008 as part of its acquisition of listed company, Alfred McAlpine plc. CITS has 440 employees across a number of locations in the UK, including 190 in Scotland. The business will be rebranded Capita IT Services following the acquisition. The acquisition of CITS will significantly enhance and expand Capita’s position in the IT services market. As well as increasing the scale of Capita’s IT Services operations, CITS has a number of key customers and expertise in a range of areas that complement and support Capita’s existing capabilities.
Mavinwood sells drain fixing firm ANSA Holdings and Preston’s Independent Inspections to private equity firm LDC. The deal said to be worth up to £19.55m, will see LDC take a majority stake for £11.6m, with the management team led by chief executive Steve Watkins also becoming shareholders.
Drydens, the Hammonds debt collection spin-off, is bought by ex-DLA partner, Philip Holden for an undisclosed sum months after another Hammonds spin-off, Hammonds Direct went into administration. Drydens, which is based in Bradford, was set up in 1984 as a unit of Hammonds. It was spun off from the law firm in 2003, but was owned by a group of former and continuing Hammonds partners.
Pearson Invests into Educomp and TutorVista in a deal valued at $30m. Pearson acquired a 17.2% stake in TutorVista, making Pearson its largest shareholder, and intends to add TutorVista’s online tutoring to its range of services for students in North America, the UK and other parts of the world. Educomp Solutions, founded in Delhi in 1994, is India’s leading listed education company, listed on India’s Bombay and National stock exchanges and serving more than 12m students across India, North America and Singapore. Pearson and Educomp have established a 50:50 joint venture to offer vocational and skills training in India.