Australian staffing firm Skilled Group (SKE: ASX) today announced that it has agreed to an AUD 422 million (USD 325 million) takeover offer from Programmed Maintenance Services (PRG: ASX), a provider of staffing, maintenance, and facility management services.

Skilled has entered into a Scheme Implementation Agreement with Programmed; under which, subject to shareholder and court approval, 100% of the company’s shares will be acquired for 0.55 Programmed shares plus AUD 0.25 (USD 0.19) per Skilled share.

Skilled shareholders will then own 52.4% of the combined entity.

The offer is valued at AUD 1.79 (USD 1.38) per share, based on Programmed’s last closing price and represents a 45.5% premium on Skilled’s closing price on 22 May 2015, the trading day before the announcement of discussions between the two companies.

The deal has been spurred by the downturn in the Australian mining sector which has hurt both companies, but Skilled Group in particular. The combined business should have annual revenue of AUD 3.4 billion (USD 2.6 billion) and will generate 41% of revenue from mining, and oil and gas, and 22% from government and infrastructure contracts.

Vicki McFadden, Chairman of Skilled, commented: “The near-term financial benefits to Skilled shareholders resulting from this transition are compelling. The combination of Skilled and Programmed creates the opportunity to unlock substantial synergies in the first year following implementation, and beyond. “

“The combination will create a larger, more diverse business with funding flexibility to support a range of organic growth and acquisition opportunities, and an enhanced equity market position… The company’s enlarged scale in staffing, maintenance, and facilities management will facilitate lower costs, better customer services, and enhanced organic growth opportunities,” she added.

Following the acquisition, Chris Sutherland, CEO of Programmed, will lead the combined organisation. Angus McKay, who only became CEO of Skilled in January 2015, will leave the company.

Pending approval, the deal is expected to close by mid-October 2015.

Programmed first approached Skilled with an offer in December 2014. However, Skilled deemed the offer to be unsolicited, conditional, and opportunistic. They claimed that the offer was based on a closing share price that was well below medium- and longer-term volume weighted average prices.

Talks were renewed in May 2015 after Programmed indicated that it was prepared to enhance the terms of the offer.

This is the second major consolidation among the largest Australian staffing firms following the acquisition of Chandler Macleod Group and Peoplebank Holdings by Japan's Recruit Holdings earlier this year.