Japanese staffing giant Recruit Holdings (6098: JP) announced that it has acquired Australian staffing company Chandler MacLeod Group (CMG: AU) and Australian IT recruitment firm Peoplebank.

Recruit Holdings has agreed to commence procedures for the acquisition of 100% of the outstanding shares of Chandler MacLeod for an estimated JPY 28.9 billion (USD 246.5 million). The shares held by all shareholders will be acquired with cash in accordance with the Scheme of Arrangement (SOA), pursuant to Australia’s Corporations Act, a method for acquiring 100% of the shares of an Australian listed company.

The company and Chandler MacLeod entered into a Scheme Implementation Deed (SID) on 14 January 2015, which stipulates the terms of the agreement concerning the proposal for the acquisition of all shares.

Since it is required to obtain approval for the acquisition proposal at a Chandler Macleod meeting of shareholders (approval by more than 50% by number of Chandler Macleod shareholders present and voting and by at least 75% of the votes cast on the resolution), as well as by the Australian court to carry out the procedures, a 100% acquisition of Chandler Macleod's shares through SOA may become impossible and the acquisition may not take place if such requirements are not fulfilled.

Following the acquisition, should it proceed, the shares of Chandler MacLeod will be acquired through Recruit Holding’s Australian subsidiary RGF Staffing Melbourne.

The first court hearing is expected to take place in late February 2015, with the general meeting of shareholders to take place in late March 2015, around the time of the second court hearing. The acquisition is expected to close in mid-April 2015.

In addition to the acquisition of Chandler MacLeod, Recruit Holdings also announced the acquisition of 100% of the outstanding shares of Australian IT recruitment firm Peoplebank for a total consideration of JPY 7.1 billion (USD 60.6 million).

Peoplebank will also be acquired through Recruit Holding’s Australian subsidiary RGF Staffing Melbourne. The acquisition of Peoplebank is expected to close on 30 January 2015.

The acquisitions form part of Recruit Holdings’ strategy to challenge the top global firms and become the largest staffing firm in the world by 2020. The company financed the acquisitions from the funds raised by its IPO on 16 October 2014, which raised an estimated JPY 193 billion (USD 1.6 billion).

In a presentation to the Tokyo Stock Exchange, Recruit said the buyouts provide it "full-scale entry into the strategically important and expanding Australian market".The announcement by Recruit Holdings follows increased Mergers & Acquisitions activity in Australia, which has thus far struggled to emerge from the global financial crisis. In December, Programmed Maintenance Services; a staffing, maintenance, and project services company lodged a merger proposal with staffing firm Skilled Group.

Skilled Group deemed the proposal unsolicited, conditional, and opportunistic, which undervalued the company by basing its deal on a closing share price, well below the medium and longer term volume weighted average prices.

According to Staffing Industry Analysts, prior to its IPO and recently announced acquisitions, Recruit Holdings was the fifth largest staffing company in the world. According to the same report; in 2013, Chandler MacLeod was lthe 23rd largest staffing company in the world, and Peoplebank the 63rd largest staffing company in the world. On a more local level, the acquisitions should see Recruit become the 2^nd largest staffing firm in Australia behind Skilled Group and ahead of Hays.

In trading today, Recruit Holding’s share price closed down 0.7% at JPY 3,610 (USD 30.81). Based on its current share price, the company has a market value of JPY 2 trillion (USD 17.1 billion) making it the most highly valued staffing business in the world. 

Staffing Industry Analysts is scheduled to release its Mergers & Acquisitions 2014 report in the next couple of weeks.