Smile Personnel Services, a Finnish human resources services firm and VMP Plc, a Helsinki-based HR services firm, announced that they will merge to create a “combined powerhouse” in the HR services industry.

VMP today signed a share purchase agreement with NoHo Partners Oyj and the minority shareholders of Smile to acquire the share capital of Smile as share consideration. NoHo Partners is Smile’s largest owner.

The transaction will be executed as a share exchange, in which Smile’s shareholders will receive 0.8087 new shares in VMP as share consideration for each share in Smile owned by them, corresponding to a debt-free purchase price of approximately €82 million (based on the closing price of €4.92 for VMP as of yesterday).

The current shareholders of VMP and Smile will hold approximately 59.6% and 40.4%, respectively, of the shares in VMP after the transaction. The completion of the transaction is subject to approval by VMP's shareholders in an Extraordinary General Meeting of VMP by a majority of two-thirds of votes cast and shares represented at the EGM and the approvals and commitments from the financing banks.

Smile CEO Sami Asikainen will act as the CEO of the combined company and Hannu Nyman, VMP CFO, will be appointed as the CFO of the combined company.

Both companies said the combination is a strategically important step for them, enabling investments in digitalisation and developing new services.

“The combination is expected to create value for the company’s customers, employees and shareholders,” the companies said in a joint statement.

“The combined company has a nationwide network in Finland through its own group companies and the franchising chain, and a larger number of staffed employees to serve the changing customer needs,” the companies stated.

Smile which provides staffing services in Finland recorded revenue of €128.6 million in 2018. The company also provides HR services nationwide for different industries, such as hotels, restaurants and catering; events and promotions; healthcare; and industry, construction and logistics.

VMP offers staffing, recruiting and organisational development, and self-employment services. In 2018, the company reported revenue for the year of €124.9 million.

CEO of VMP Juha Pesola, commented, “In recent years, VMP has evolved from a staffing-focused company into a comprehensive HR services company, whereas Smile has grown rapidly into one of the largest staffing companies in Finland. Together, we are a significant player in the labour market and can accelerate digitalisation in the industry, provide employment enhancing services as well as provide a wider range of services to our customers.”

“The new company created together with another industry leading company, VMP, will become a reformer of the labour market and the HR services industry,” NoHo Partners’ Chairman of the Board Timo Laine, said.

Smile CEO Sami Asikainen also commented, “It has been great to be a part of Smile’s growth during the last five years. We have a great growth story behind us and now in line with our strategy we will take the next step, when we combine two successful players and form a new player in HR services in Finland. It is amazing to get the opportunity to lead the combination of two winning firms.”