Japan's Recruit to Acquire Dutch Employment Firm USG People

  • Offer is 31% above USG People's last closing share price
  • Recruit to become world's 4th-largest staffing firm after deal

Recruit Holdings Co. agreed to buy USG People NV of the Netherlands for 1.42 billion euros ($1.55 billion) as Japan’s biggest provider of temporary staff seeks to boost growth in Europe.

Recruit will pay 17.50 euros in cash for each share in Almere, Netherlands-based USG, the companies said in a statement Tuesday. That’s a 31 percent above Monday’s closing share price. USG shares rose as much as 28.6 percent to 17.23 euros per share in early trading in Amsterdam.

The Japanese company is seeking acquisitions to compete with global peers such as Adecco SA and Manpowergroup Inc. Recruit will become the world’s fourth-largest recruitment company by revenue after buying USG, Chief Financial Officer Keiichi Sagawa said in a briefing in Tokyo Tuesday, adding the company still has 400 billion yen ($3.3 billion) left in its war chest for deals.

"The deal will allow Recruit to buy time as opposed to building a new business in Europe, so it’s positive,” said Hiroaki Hiwada, a Tokyo-based strategist at Toyo Securities Co. The Dutch purchase “is an example of the cross-border acquisitions by Japanese companies which show their aggressive management strategy,” he said.

Overseas acquisitions by Japanese companies rose 82 percent this year to $97.6 billion, from $53.8 billion in the same period in 2014, data compiled by Bloomberg show. The USG People deal will be Recruit’s largest purchase after the company completed nine deals worth $665.5 million since it went public in October last year.

Growing Platforms

Recruit is paying about 9.3 times USG’s 2016 EBITDA, in line with other major temporary staffing companies in Europe. That compares with the median of 11.6 times paid by Adecco SA for 10 acquisitions, and 8.5 times for eight deals completed by Randstad Holding NV, according to data compiled by Bloomberg.

Chief Executive Officer Masumi Minegishi said in an Oct. 2014 interview the company’s ready to spend about 700 billion yen on acquisitions over the next three to five years and has identified about 100 companies as potential takeover targets. To help build its war chest, Recruit went public last year in an initial public offering that raised 197 billion yen.

“We are seeking to grow our business platforms in Japan and abroad organically and through acquisitions,” Minegishi said in a statement Tuesday. “The acquisition of USG People is perfectly aligned with this strategy.”

‘No Overlap’

USG People founding shareholder Alex Mulder has agreed to tender his shareholding of 19.8 percent in USG People as part of the offer, according to the statement. The deal values USG People at 1.61 billion euros when including net debt.

The offer has been endorsed by USG’s executive and supervisory boards. There will be little consequence for USG employees as there is no geographic overlap between the two countries, executives said on a call with reporters Tuesday.

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