Human capital management group Adcorp (ADR) is to acquire the entire issued share capital of Paxus‚ an Australian market leader in the IT contracting and recruitment industry‚ for AUS$60 million - or approximately R545 million‚ it said Wednesday.
Payment for the business will be made in cash to be funded by way of a fresh issue of 13 million Adcorp shares which will be placed with South African financial institutions as well as approximately R252 million debt to be raised in the Australian debt markets.
Started in 1973 with current revenues approximating R3.0 billion‚ Paxus has offices throughout Australia and has a strong and recognised brand in the specialised‚ niche IT recruitment and contracting market.
A year ago‚ Adcorp bought specialised South African IT contracting and recruitment business‚ Paracon.
“The two businesses are extremely complimentary in that they deal in similar markets in the same niche skills set. As such‚ the opportunity for these two businesses to work together is significant”‚ said Adcorp CEO‚ Richard Pike.
Paxus provides IT resources both on a contracting and permanent basis across a wide spectrum of IT specialties and functions including business analysts‚ project managers‚ consultants‚ analyst programmers‚ testers‚ and desktop/PC support. With loyal clients‚ contractors and employees and a corporate focus on operational excellence‚ Paxus has performed strongly.
“Paxus is a well-established business with a solid financial track record and strong brand name. It has an experienced management team and an excellent reputation. It has long established relationships and preferred supplier status with some of Australia’s blue chip companies as well as various government departments. In addition‚ the seller of the business‚ CSC‚ is currently Paxus’ largest client and will continue to procure IT resources from Paxus in terms of a five year supply agreement between the two companies”‚ added Pike.
The acquisition will be earnings enhancing for Adcorp shareholders and will provide greater diversity of risk to earnings given the geographic‚ client and service line spread it introduces to the Group. Paxus is also highly cash generative in line with Adcorp’s existing business model. - I-Net Bridge