Allied Healthcare International Inc. (AHCI:NSQ), the US-quoted provider of temporary staffing services to the health care and social care industries in the UK, has announced yesterday that its UK subsidiary, Allied Healthcare Group Limited, has acquired the homecare business of Health and Lifecare Options Limited (HALO).

Despite short-term reduction in demand due to economic austerity measures, healthcare staffing is still proving a very attractive and popular niche for acquisitive companies. Staffing Industry Analysts' research identified that healthcare staffing represented 18% of all staffing industry M&A transactions in Europe during the course of 2010.

ScotHomecare is a flexible domiciliary homecare business with nine branches in Scotland and one branch in Leicester, England. ScotHomecare delivers over 10,000 care hours per week for the elderly, as well as for adults with physical disabilities and has revenues of approximately 6 million Pounds per annum. ScotHomecare's services include adult health care, child nursing care, palliative care nursing and elderly care services.

The transaction will allow Allied to introduce new higher margin services, including learning disabilities and continuing care, in the new locations. The company will also have an opportunity to expand existing volumes of care to the elderly under Allied's management structure. Allied expects this acquisition to be accretive to its earnings.

Allied has acquired the entire share capital of HALO for a total of 2.5 million Pounds. This was funded through Allied's cash on hand. 800,000 Pounds initial consideration was paid on completion of the transaction, 200,000 Pounds was deferred for three months to finalise completion accounts, and 1.5 million Pounds of liabilities will be repaid by Allied. In addition, 250,000 Pounds of working capital and sundry fixed assets associated with the business are included on completion.

Sandy Young, Chief Executive Officer of Allied, commented, "the ScotHomecare acquisition is in line with our strategy of expanding Allied's geographic footprint and enhancing value for our shareholders. The transaction will provide Allied with a market leading position in Scotland, as it will double our current Scottish operations of 11 branches and help to support their strong growth momentum for the past two years."

"We will now be able to develop both learning disabilities and continuing care services at an increased scale. We also expect to benefit from ScotHomecare's customer base and reputation. Further, we believe we will be able to benefit from additional outsourcing opportunities in Scotland, as the Scottish market is currently only 40% outsourced as compared to 80% in England. I am also delighted to welcome ScotHomecare employees into the Allied Healthcare Group and provide them with new opportunities within the combined business."

Ann Rushforth, former Chief Executive Officer and owner of HALO, added "it has been a pleasure to lead the ScotHomecare team to this point, and I leave the business in the capable hands of the current Managing Director of ScotHomecare, Anne Sinclair."

At the end of play in New York last night Allied Healthcare's shares were down by -2.08% to $2.35