Adecco to become world's largest temp staffing firm with $2.4b AKKA acquisition
Published: Jul 29, 2021 07:58 PM
Photo: IC

Photo: IC

Adecco Group has agreed to buy AKKA Technologies in a deal worth 2 billion euros ($2.4 billion), it said on Wednesday, the biggest deal in the Swiss staffing company's 25-year history.

The acquisition of Belgium-based AKKA will make Adecco the world's largest provider of temporary staffing by revenue, overtaking Dutch rival Randstad.

Adecco will combine AKKA with its science and IT staffing business Modis to boost its services, which provide engineering, technical, and research and development (R&D) staff to automakers and aerospace companies.

Companies are increasingly outsourcing R&D work to outside consultants, a trend Adecco hopes to benefit from following the deal, which Chief Executive Alain Dehaze called Adecco's most important ever.

"This is not just about faster growing our top line, but differentiating our business and having higher margins," Dehaze told Reuters.

"This is a huge opportunity; it is a growing market, it is a high-value market," he added.

AKKA provides experts to aerospace companies like Airbus.

The transaction will be financed mainly through approximately 1 billion euros in new senior bonds, a 500-million-euro hybrid bond and placing new ordinary shares to raise gross proceeds of up to 350 million euros, Adecco said.

With revenue of 3.7 billion euros and 50,000 engineers on the books, the combined business had the advantage of being less vulnerable to economic ups and downs than other parts of Adecco's operations, Dehaze said.

"Almost all industries have to transform their products into smart and connected products. All of them have to be re-engineering and reinvented," Dehaze said.

"You see cars becoming computers on wheels because they are connected. You need new capacities to help customers develop these smart products."

The sectors AKKA works in also boast higher growth rates and profit margins than the other parts of Adecco's business, Chief Financial Officer Coram Williams told Reuters.

"As a rule of thumb, these companies [like AKKA] can deliver 10-percent growth and margins of 10 percent on an EBITA basis," he said.

Adecco's all-cash offer of 49 euros per share, which has been accepted by AKKA's controlling shareholders, represents a premium of 115 percent to its share price last Friday.

Adecco on Wednesday also reported second-quarter revenue rose 26 percent to 5.26 billion euros, while net income increased to 145 million euros from 21 million a year earlier as the post-pandemic hiring recovery gathered momentum.

Bank Vontobel analyst Michael Foeth said the AKKA acquisition made sense because it diversifies Adecco's profile into less-cyclical, higher-growth and higher-margin activities.

"We view today's results and acquisition announcement as positive for Adecco at first glance," he wrote in a note.