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UK recruitment firm Savile Group (SAVG: LSE) has reached an agreement to sell their entire issued, and to be issued, ordinary share capital to international HR consulting firm Penna Consulting (PNA: LSE). The total value of the shares is approximately £1.1 million.
Under the terms of the offer, Savile shareholders will be entitled to receive £0.07 per share. According to the agreement notification, the share price offer represents a premium of approximately +115% to the closing price of £0.0325; as of the close of business on 11 November 2013.
Commenting on the offer, Stephen Rowlinson, Chairman of Penna, said: "Penna and Savile have complementary businesses. Both companies are committed to providing their clients with the highest possible standards of service and providing their employees with the opportunity to pursue satisfying, stimulating and rewarding careers. The enlarged group will provide clients with a broad range of Human Resource services and could benefit from opportunities to reduce costs by elimination of duplicated administrative functions. The Board of Penna believes the merger will be earnings enhancing in the first full financial year following the offer becoming, or being declared, unconditional in all respects."
David Harrel, Chairman of Savile, added: "We are pleased to be teaming up with Penna who we believe will provide our businesses with the scale and resources needed to compete more effectively in their respective markets."
The announcement concerning their acquisition by Penna comes on the same day that Savile Group belatedly released its latest financial results. The company had been expected to release its annual financial results on 5 October 2013.
Savile Group reported revenue for the year ending 30 June 2013 of £8.1 million, an increase of +9.4% from £7.4 million last year. Despite improved revenue, year-on-year, the company reported an operating loss of £333,000, more than three times greater than their operating loss of £102,000 for 2012.
David Harrel commented on the results: “The Group faced another challenging year, especially in the first half, with an improvement in performance in the second half, in which the Group returned to profit. Career transition revenue increased year on year and this segment of the business was profitable. However the talent management segment was loss making, with the re-launch of Cedar not gaining the traction we had hoped for despite our continued investment in this area.”
“However, as noted in our recent trading update, the first quarter of the new financial year has been extremely disappointing and below the Directors' expectations, with a significant downturn in activity in the Group's career transition business. Trading during July and August was below the Directors' expectations in what are traditionally quiet months and the usual recovery in September was much weaker than in previous years. Trading has continued at lower levels than for the equivalent period last year in career transition, reflecting subdued career transition activity in the financial services sector as the economy recovers.”