Marlborough International, the State's largest recruitment company, announced yesterday that it is in talks which may lead to a take over of the company.
The announcement has led to the share price rising to an all-time high in London, when it closed yesterday at £2.225 sterling (£2.75), a 59 per cent increase on its price a week ago.
The company, which also has operations in Northern Ireland, Britain and Australia, stated that it has received an approach which may lead to an offer being made for the company, which was floated just two years ago.
The statement led to a sharp rise in the company's share price in London. It is also quoted on the ISEQ although the shares did not trade there yesterday.
The stock is relatively illiquid, with well over 50 per cent of it being held by its management. The managing director, Mr David McKenna, controls 51 per cent of the stock according to a spokesman for the company. He is listed in the annual report as personally having 44.5 per cent of the stock. The spokesman stressed that no formal offer had been made but the advice from NCB, its corporate advisers, was to inform the stock exchange of the approach following a rise in the company share price in London last Friday of 27.5p sterling to £1.675 (£2.07). Speculation in the industry is that a multinational company with operations in Britain would be a likely bidder. These include such companies as Adecco, the Swiss employment agency and Hays, the British support services group. Another large US company Manpower was also mentioned in market speculation, but it is believed that they are not the party involved. Other possible bidders include British companies such as Reed Executive, Capita and Select Appointments.
Prior to the recent gains in the share price, Marlborough's market capitalisation was €70 million (£55 million). At yesterday's close, when it rose a further 55p sterling to £2.225 sterling (£2.75), the company had a market capitalisation of €110 million (£86.35 million). Mr Pat O'Sullivan Greene, an analyst with ABN AMRO, said there was considerable consolidation in the industry internationally, with 81 mergers and acquisitions in Europe in 1998. Marlborough was a good prospective acquisition, with about 20 per cent of the Irish recruitment consultancy sector, operating in an expanding market and on an operating margin of 15 per cent, one of the highest in that sector. "Ireland is one of the few countries where a local player has a strong and leading position," he said.
He said the employment of temporary workers was relatively underdeveloped in the State and would provide a growing niche for recruitment companies. Marlborough also has a good geographic spread, with seven offices outside of Dublin. Marlborough has made a number of acquisitions in recent months.
Its managing director, Mr David McKenna, was unavailable for comment. He bought the company out of liquidation for £6,000 in 1992. Currently, he owns 44.5 per cent of the stock, which would amount to a payment of €40 million (£31.5 million) if the company is sold for €90 million. Last week, Marlborough issued results showing a 2.7 per cent increase in pre-tax profits to €2.85 million (£2.24 million) for the first six months of this year.
