Adecco boosts high-margin business with MPS deal

       Adecco, the world's largest staffing company, is buying American rival MPS Group for $1.3 billion, boosting its high-margin and more recessionresilient professional staffing business.
       Adecco also said it was launching a 900 million Swiss franc ($888 million)mandatory convertible bond to accommodate the cash deal, though one rating agency promptly put its investment grade credit rating on watch.
       This deal, plus the recent acquisition of Britain's Spring Group, means close to 25% of group revenues will be generated in the more lucrative professional staffing arena, up from 17% in 2008.
       "We are delighted to have MPS Group become part of the Adecco Group, in a move that will see Adecco taking the worldwide lead in professional staffing,"CEO Patrick De Maeseneire said in a statement, who later added that this was the last big acquisition on the cards.
       Adecco also sounded a more upbeat tone on its trading environment, saying market conditions had improved during the third quarter. The group will post quarterly figures on Nov 5.
       "This acquisition is fully in line with Adecco's strategy to strengthen its professional staffing business, which offers higher margins and more attractive growth opportunities," Helvea analyst Chris Burger said in a note.
       The move marks a significant coup for De Maeseneire who took over the helm in June from Dieter Scheiff. Adecco failed last year in its bid to buy professional staffing group Michael Page, which many believed was the reason behind Scheiff's departure.
       "After the unsuccessful try to take over Michael Page, MPS Group was chosen, which has a similar, or even slightly bigger, size in terms of sales,"Burger said, adding the deal put Adecco ahead of rival Robert Half in professional staffing.
       Adecco would now focus on organic growth, De Maeseneire told Reuters."The big acquisitions are done now," he said."We now have a strong platform to grow organically."
       MPS Group's board of directors has unanimously backed Adecco's offer of $13.80 per share, which represents a premium of 24% over the Florida-based company's last closing price.
       Standard & Poor's said yesterday it had placed its BBB rating on Adecco on CreditWatch with negative implications as a result of the deal.
       But chief financial officer Dominik de Daniel said he was confident Adecco would be able to keep its investment grade rating thanks to the convertible mandatory bond offering.
       The MPS deal is expected to close in the first quarter of 2010.
       Adecco's news comes as Dutch group Randstad NV said Britain's NorthgateArinso was buying its human resources services unit Cian.