Listed human capital management group, Adcorp Holdings Limited, announced today
that it has submitted a formal offer to acquire leading, listed, specialist information
and communications technology (ICT) resourcing and solution business, Paracon, by
way of a scheme of arrangement.
Adcorp’s offer of approximately R 662 million is in respect of the proposed
acquisition of the entire issued share capital of Paracon. This represents a 12%
premium to the prevailing share price of Paracon at the time that both entities
simultaneously issued cautionary announcements warning shareholders that
negotiations were in progress.
Adcorp intends to pay for the acquisition by issuing new Adcorp shares to existing
Paracon shareholders with one new Adcorp share being offered for every 13.812
Paracon shares currently held.
The offer also makes allowance for a cash alternative to the share offer of R 1.97 per
share at the election of Paracon shareholders save that, the cash alternative is limited
to a maximum of R 265 million which approximates 40% of the purchase price.
The cash alternative will be funded by Adcorp’s existing funders whilst still
maintaining manageable gearing limits.
Should the offer be successful, it is the intention of Adcorp to delist Paracon.
Founded in 1995 and listed on the JSE in 1999, Paracon is a leading specialised ICT
resource and solution business. Services include ICT resourcing, permanent
recruitment services, project management, consulting, training, ICT professional
services, networking and general ICT solutions. The strength of the business lies in its
ability to strategically bring skilled resources together to provide tailor-made
solutions for clients.
Paracon also holds a 34.9% equity stake in Nihilent Technologies, an Indian based ICT
solutions provider.
Adcorp CEO, Richard Pike said that the acquisition of Paracon would significantly
strengthen the Group’s offerings with regard to the resourcing and placement of
professional ICT skills.
“Paracon is a well-run, quality, cash generative business. As such, it is not our
intention to tamper with what has been a successful formula but rather to further
nurture and promote this winning culture within the business,” said Pike.
“Strategically, the proposed acquisition adds significant advantage as it will broaden
the spectrum of comprehensive staffing solutions we are able to offer our clients
under one roof, particularly in the specialised niche area of ICT where we currently
have a limited offering.
“The proposed deal also offers an opportunity for the rationalisation of certain costs
associated with being listed as well as optimising borrowing costs. It should provide
greater career prospects for the staff of the two entities as well as better
opportunities to incentivise and retain top talent.
“In addition, the transaction will add critical mass to the Adcorp Group and will
further diversify group risk whereby the expected revenue of the combined entities
will now exceed R 6.5 billion.
“Given the significantly bolstered market capitalisation of the merged entity, it is also
likely that shareholders will enjoy greater liquidity in the tradability of the shares of
the combined entity than they did in the past,” continued Pike.
The proposed transaction offers an attractive premium to the prevailing share price
for Paracon shareholders should the transaction be successful.
“The strategy, business philosophies and strong emphasis on cash generation of the
two businesses are quite similar which should make for a good culture fit and, as
such, an easier integration of these businesses,” said Pike.
The offer is still subject to the requisite approval of the respective shareholders of
both Paracon and Adcorp as well as approval by the competition authorities and
certain other regulatory approvals that are required.
Issued by: Meropa Communications
On behalf of: Adcorp Holdings, Group Marketing Manager, Mandy Jones