Adecco goes shopping again

(By Anthony Miller – Tuesday 20th October 2009 8;15am). Barely has the ink dried on its acquisition of leading UK ITSA (IT staff agency) Spring Group (see Spring is sprung!), than Zurich-based staffing giant Adecco is at it again. This time it’s US-based professional staffing group MPS Group (nee Modis Professional Services). Adecco will pay $1.3b cash which, at $13.80 per share, is a 24% premium on last night’s close.

Last year MPS recorded revenues of $2.2b at 29% gross margin and 6.6% operating margin, though this excluded a $379m impairment charge which sent net earnings negative. In its most recent quarter (to 30th June), MPS recorded $418m in revenues at 27% gross margin but only 1.6% operating margin. So, based on last year’s ‘adjusted’ numbers, Adecco is paying 0.6x sales and 9x EBIT for MPS. In comparison, Adecco paid 0.2x sales and 15x EBIT for Spring, though that deal ‘only’ cost them £100m.

MPS’ ITSA business trades as Modis International in the UK and Continental Europe. Its revenues last year were $329m, at 18% gross margin and 3.9% operating margin. I believe most of this is UK-based. MPS also runs the Badenoch & Clark professional staffing brand.

So, the relentless consolidation of the staffing industry continues. Will Adecco take another tilt at Michael Page I wonder?